Major companies should lead the way in raising employees' wages, and then this trend should be expanded to small and midsize firms and nonregular workers.
This year's shunto spring negotiations between labor and management are getting into full swing. Labor and management will continue talks on improving working conditions, such as by lifting wages, until the days in mid-March when many management teams are scheduled to give their formal replies to union demands.
Lifting wage levels for all workers is essential for ensuring the economy casts off the shackles of deflation. As a first step, much hinges on whether large companies can make high-level wage increases a reality for their employees. Both labor and management will be expected to make proactive efforts on this issue.
The Japan Business Federation (Keidanren) has called for wage hikes since the 2014 shunto negotiations, but annual increases since then have been stuck between 2 percent and under 3 percent. This year, Keidanren called on its member companies to raise wages by 3 percent, and even urged them to positively deal with requests for a base pay increase, in which basic salaries are bumped up across the board, and regular pay raises.
The economy is in fine fettle, and the net profit raked in by all listed companies this fiscal year is forecast to set a new record high. This should give a tailwind to shunto negotiations.
Some companies have declared they will raise wages by 3 percent. However, based on the level of increase demanded by labor unions at major firms, achieving that figure overall will not be easy.
The union of Toyota Motor Corp., one of Japan's leading companies, requested that monthly base wages be lifted by 3,000 yen. Even if management agrees to pay this full amount, combined with regular pay raises the total increase will be 2.9 percent.
Govt has key role
Nissan Motor Co.'s total increase would be 2.4 percent and that of major electronics maker Hitachi, Ltd. would be 2.8 percent.
Not only the management side but also the union side have been noticeably disinclined to realize wage increases.
Some unions likely capped their demands out of consideration for elements of uncertainty surrounding their company's management, such as recent wild fluctuations on the stock market and a strengthening of the yen, as well as intensified competition to develop technologies such as self-driving vehicles.
Of course, wage hikes will be decided by labor-management negotiations based on each company's business performance and outlook. Quite a few businesses have meager funds due to their poor results.
Companies will need to offer a combination of various methods. This will not be limited to hikes in basic pay and regular pay increases that lock in higher wages, but also include bonuses, allowances and training to develop more skilled human resources. Labor and management should cooperate and press the accelerator for "investment in people."
The government's role also is important. It should promote easing of regulations that encourage an active approach to investment by companies that are anxious about their business performance.
The government also needs to support measures to boost productivity by using artificial intelligence and robots, by bringing together technologies from across the industry spectrum.
Some observers have pointed out that rectifying long working hours through work style reform can result in overtime pay dropping. If employees' take-home pay shrinks, efforts to encourage consumer spending could fall flat.
Companies boost productivity and increase profits, and then return these funds to workers as higher wages. It is vital to create such a virtuous cycle.
(From The Yomiuri Shimbun, Feb. 25, 2018)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
