Since 2002, major Japanese labor unions have refrained from demanding wage increases during their annual spring labor offensive (shunto). Instead, they have concentrated on securing union members' jobs amid a persistently stagnant economy. But after a long "winter," a ray of hope appears to have emerged for Japan's labor.
In the first round of this year's negotiations, carmakers and electronics firms have agreed to raise monthly wages for the first time in five years. This is a sign that employers have become confident about future business prospects and have come to think that workers have to be rewarded for helping their companies tide over a difficult period. The pay raise, although modest, should serve as a catalyst for brightening the economic outlook of all of Japanese society.
Shunto started in the 1950s as an effort to raise workers' base wages. Labor unions in each industry used to submit a unified demand for an across-the-board wage increase and management would respond with a unified offer. It was a wage-raise mechanism suited for a time when Japan was enjoying steady economic growth. After the economic bubble burst, however, Japan's labor had to accept wage cuts and workforce reductions, with many unions giving up on pay raises.