Business / Corporate

Japan's top business lobby calls for review of uniform base pay hikes

Kyodo

The nation’s most powerful business lobby called Tuesday for a review of the practice that sees industrywide labor unions demand a uniform raise in base pay, saying the performances of individual companies and employees should be reflected.

“There is a big gap in the business environment and profitability among companies in the same industry, so collectively and uniformly demanding wage increases no longer fits the reality,” Hiroaki Nakanishi, chairman of Keidanren (the Japan Business Federation), told a forum in Tokyo ahead of the start of annual labor-management wage negotiations.

At the event attended by representatives of labor unions and company officials in charge of personnel management, Nakanishi also sought a review of other long-held practices, including automatic wage increases on the basis of employees’ age or length of service and employment until retirement age.

Nakanishi said some companies have already changed their wage systems so they can better reflect the performances of each employee out of the need to respond to the competitive and fast-digitalizing global economy.

The country’s largest labor organization, meanwhile, maintains its conventional demand for wage increases, seeking a uniform pay hike totaling 4 percent — around a 2 percent raise in workers’ basic pay in addition to a regular wage hike based on seniority. The Japanese Trade Union Confederation, also known as Rengo, will also for the first time set a specific numerical goal for a minimum hourly wage of ¥1,100 to narrow the wage disparity between regular and nonregular workers as well as between small and large firms.

Rengo leader Rikio Kozu, who met with Nakanishi ahead of the forum, said a wide range of laborers, including those at small and medium-size companies and nonregular workers, need to feel the benefit of a pay raise.

“The wave of wage increases has not spread throughout society,” Kozu said. “I think Japan as a whole has been shrinking due to the declining population, aging society and the (unfavorable) wage situations.”

The annual shuntō wage negotiations will get into full swing when labor unions present their requests around mid-February.

Responses by the management of major companies will hit their peak around a month later, with the focus on how much wages can increase amid global risks posed by U.S.-China trade friction and concerns about the negative impact of the consumption tax hike in October.

Prime Minister Shinzo Abe called on companies last month to increase wages as a key factor in helping spur private consumption and fighting deflation. But he did not give a numerical target.

Last year, major companies increased wages by an average of 2.43 percent, or ¥8,200 a month, following the spring wage negotiations, topping 2 percent for the sixth straight year, according to Keidanren.

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