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Bad business conditions because of the global recession triggered by the financial crisis that originated in the United States took a toll on Japanese labor in this year’s spring wage negotiations. Major carmakers and electronics companies told labor that they will not increase base pay and that bonuses will be lower than demanded.

The stance taken by these companies usually influence the response of other industries. Expect wage talks at medium-size and small enterprises, which are held after talks at larger companies, to become more difficult.

The severe stance at major companies derives from the fact that they expect huge operating losses for the business year ending March 31. Their survival has become top priority. Reflecting the difficult situation, they have decided not to raise base pay from the previous year’s level. The aggregate effect of management’s response could lead to tighter purse strings and thus delay the recovery of the Japanese economy.

In the wake of price rises last summer, the Japanese Trade Union Confederation (Rengo), Japan’s largest labor organization, made a raise in base pay a unified demand for the first time in eight years. But bad corporate performances due to the global recession made the unions’ demands appear unrealistic. In this situation, whether to maintain regular salary increases based on seniority has become a focal point in many companies. Although major automakers have agreed to maintain the increases, some electronics companies have proposed a temporary freeze on regular increases.

Although wage raises sought by labor were defeated, workers at major companies may have at least succeeded in securing their employment. But major labor unions should not forget that many temporary workers have been fired in this economic downturn. As the economy worsens, even regular workers might end up losing their jobs in large numbers. Labor and management should cooperate to work out ways to minimize the impact. Worker losses could damage companies’ human resources in the long run and eventually weaken the whole economy.

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