The proposed pay hikes undeniably lack the power to ensure the nation's departure from deflation. Further efforts must be made to improve the treatment of workers, who engage in production work and who are also the core of consumption.
In this year's annual spring labor-management wage negotiations involving major businesses, which include automakers and electric appliance makers, the management side has simultaneously shown pay hike levels, among other things, to labor unions for the new fiscal year starting in April.
For this year's spring wage talks, the Japan Business Federation (Keidanren) has set a target of a 3 percent hike on an annual income basis. Keidanren called for its member companies to respond actively by increasing pay scale, in which basic salaries are bumped up across the board, and boosting regular pay increases.
The fact that more firms have offered bigger basic pay increases than last year could serve as a tailwind for business recovery. It is also notable that some companies have offered a 3 percent increase on an annual income basis.
However, the fact remains that the proposed increases centered on higher bonuses. There are fewer companies that have achieved the targeted 3 percent increase through pay scale increases and regular pay hikes alone. So the offered pay increases seem to have a limited effect on spurring consumption.
Honda Motor Co.'s pay increase offer topped 3 percent on an annual income basis, but it is believed that the carmaker has stopped short of reaching 3 percent in terms of the combined pay scale increase and regular pay hike. Nissan Motor Co.'s pay scale increase and regular pay hike stood at 2.4 percent.
Major electric appliance maker Hitachi Ltd. has offered a 2.3 percent hike with pay scale increase topping that for the previous year, but this is half the increase seen in the 2015 spring labor negotiations.
Looking at big businesses on the whole, the pay scale increase and regular pay hike percentage is widely believed to be at the 2 percent level, the same level as in the previous year.
It is imperative for the management side to shake off the deflationary mind-set that hardens its defensive stance, and switch to an aggressive policy stance.
Vital to boost productivity
The future course of labor-management negotiations at small and medium-size companies, where 70 percent of all workers are employed, holds the key to realizing a virtuous circle in which pay hikes spur consumption and thus enhance corporate performance.
One way to secure financial resources for the realization of pay hikes for subcontractors would be for big businesses to make concessions in the terms and conditions of transactions with them. Realizing basic pay increases at small and midsize companies would help deal with their manpower shortage.
Concerning non-regular workers, it is imperative to tackle the task of raising their allowances in tandem with efforts to employ them as regular workers.
In this year's spring labor-management pay raise talks, an agreement has been reached at many firms to remedy long working hours ahead of work style reforms being promoted by the government.
Unjust labor practices such as unpaid overtime work must be reformed. There is also concern, however, that a decrease in overtime will cause a drop in employees' income.
If the government's regulation of overtime comes to pass, workers' after-tax income will decline by about 3 percent, according to one survey result.
Pay hikes would come to nothing if they are offset by cuts in overtime payment. Businesses should study measures to enhance their earning power and firmly maintain real-term pay increases.
Improvement in productivity is indispensable to ensuring continued pay hikes. Investment in information technology to boost business efficiency and fostering high-level human resources are urgent tasks to be tackled. The government, for its part, should bolster tax assistance measures, to encourage corporate investment in human resources.
(From The Yomiuri Shimbun, March 16, 2018)
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