The head of the influential Keidanren business lobby on Monday called on management and labor unions to hold "thorough negotiations" on wage hikes to help Japan declare an exit from years of deflation, as the annual talks shift into top gear.
Sadayuki Sakakibara, chairman of Keidanren, also known as the Japan Business Federation, asked companies to "make utmost efforts" to allocate more of their windfall profits to wages, capital spending, and research and development.
"I hope that labor and management will engage in thorough negotiations in wage talks this spring with an eye to attaining sustainable growth and find common ground," Sakakibara said at a forum on labor-management issues.
The Keidanren chief indicated company executives need to consider raising wages by themselves, not because the government is asking them to do so.
Prime Minister Shinzo Abe is urging company executives to raise wages for the third straight year, as major firms, particularly export-oriented ones, collected record profits thanks in part to a yen weakened under Abe's Abenomics program.
For this year's annual wage talks, Keidanren is calling on its member firms to support annual income growth for workers. To achieve that, companies do not need to stick to pay-scale hikes and can opt to provide one-time increases, according to the lobby's guidance report.
Major companies appear willing to consider wage hikes, but small and midsize companies remain cautious amid concerns about China's slowdown and falling crude oil prices.
The Japanese Trade Union Confederation (Rengo), the nation's biggest labor union body, is calling for a base pay rise of around 2 percent this year, compared with its call for a rise of 2 percent or higher in 2015.