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Expectations for wage hikes grow as ‘shunto’ negotiations draw closer

JIJI

The annual labor-management wage negotiations are gathering steam as March approaches, amid growing worker expectations of pay-scale increases.

Labor unions are taking a more aggressive stance this year against the backdrop of strong calls from the administration of Prime Minister Shinzo Abe for wage hikes to help pull the economy out of deflation.

The Japanese Trade Union Confederation (Rengo), the nation’s umbrella organization for labor unions, has said it is calling for pay-scale increases of at least 2 percent, compared with last year’s demand for hikes of 1 percent or more.

Rengo President Nobuaki Koga said that “continuing hikes in monthly wages are indispensable to realize a favorable economic cycle” amid price increases stemming from the consumption tax hike in April last year and the yen’s rapid fall.

In line with Rengo’s decision, the Japanese Electrical, Electronic and Information Union and the Confederation of Japan Automobile Workers’ Unions are each demanding monthly pay-scale increases of ¥6,000 or more.

In last year’s “shunto” spring labor talks, major electronics manufacturers and automakers decided to raise pay scales, setting the pace for negotiations at other companies.

Leading electronics and automobile manufacturers have seen their earnings rise thanks to the continued depreciation of the yen.

“Union members will not accept hikes that are not larger than last year’s,” said the leader of a labor union at a major electronics-maker.

Labor unions at small and midsize companies, such as the Japanese Association of Metal, Machinery and Manufacturing Workers (JAM), see this year’s shunto as a good opportunity to narrow wage gaps between big and smaller firms.

JAM demanded monthly pay-scale hikes of ¥9,000.

The administration, meanwhile, has become more involved than ever in labor-management pay negotiations. At a New Year’s party in Tokyo on Jan. 6, Abe urged business leaders to carry out pay hikes this year.

The call followed an agreement between business and union leaders late last year to meet Abe’s repeated demand that the business community “do its utmost to implement pay hikes.”

With a string of other government leaders making similar calls, a union leader at a big electronics maker said that the management of companies will have “no other choice but to raise wages.”

However, some executives question the administration’s intervention.

“Wage negotiations should be between labor and management,” said one such critic.

Once agreed by labor and management, pay scales are maintained regardless of business results. As companies are exposed to high risks if they raise pay scales, they prefer to reward employees for good results with higher bonuses.

Similarly, labor unions are also uneasy about the administration’s deeper involvement in wage talks, fearing that workers will have to give the government the credit for pay increases.

The government should “leave us alone,” because it may also call for pay cuts in other circumstances, a JAM official said.