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.
The first-round results of this year’s negotiations clearly show that the age of the shunto formula for uniform pay raises is over. Disparities have set in from industry to industry, and from company to company.
Toyota Motor Corp., the leader of Japan’s car industry, has agreed to a 1,000 yen raise in basic monthly pay plus a seniority-based automatic pay raise of 6,900 yen. The company refuses to use the term across-the-board wage raise for the 1,000 yen portion, explaining instead that the amount will rectify distortions in workers’ wages. Nissan Motor Co. has agreed to an average 7,000 yen wage hike. Honda Motor Co. has agreed to an across-the-board basic wage hike of 600 yen — lower than the 1,000 yen demanded by the union. Meanwhile, Mazda Motor Corp. has offered no wage increase, and Mitsubishi Motors Corp.’s labor union made no demand for one.
Among electronics companies, Fujitsu Ltd. has offered a 1,000 yen wage increase while most other firms have offered a 500 yen increase. Sanyo Electric Co., whose business performance has suffered, did not join wage-hike talks. Major steel makers have put off wage hike offers, although they are expected to register record-high gross profits for the fiscal year ending March 31. Major shipbuilders and heavy machinery makers have made no wage-raise offers since they have not posted good business results.
Not all labor unions have gotten what they demanded. Some labor unions have been offered wage increases, but not big ones. This is because management resisted monthly wage hikes that would ultimately have to be reflected in retirement allowances. It wants to maintain or improve competitiveness in the international market where China and other Asian countries have mounted offensives that use cheap labor costs as a weapon. At the same time, Japanese management feels the need to maintain or nurture valuable human resources by offering better wages.
The wage hikes offered by management can be seen as a result of its careful consideration of two mutually conflicting factors. For labor, the first wage hikes in five years should come as a relief; they are also an indication that its union activities are not fruitless. This marks a significant breakthrough for union leaders as the power of Japan’s organized labor has been dwindling. Less than 20 percent of Japanese workers now belong to a labor union.
Automobile and electronics industries are at the top of Japan’s industrial hierarchy. Below them are medium-size and small companies. In this year’s shunto, the Japan Trade Union Confederation (Rengo), Japan’s largest labor organization, is trying to rectify the wage gap between major and smaller companies and between regular workers and irregular workers such as part-timers and temporary workers.
This is the third year in which Rengo has formed a joint push with unions from smaller companies. And it has widened the scope of talks this year to include irregular workers for the first time. Fifteen groups representing them are engaged in wage-hike negotiations as part of the united front.
Wage levels for irregular workers, who account for about one-third of Japan’s workforce, are about half that of regular workers. A further widening of the gap between regular and irregular workers would make Japan a gloomy place in which to live and work. In this year’s shunto, labor union leaders must do their utmost to gain a foothold toward narrowing that gap.
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