Difficult economic conditions caused by the 3/11 disasters, the floods in Thailand, prolonged deflation, the strong yen and the sovereign debt crises in Europe have cast a shadow over this year’s annual wage negotiations. Although the Japanese Trade Union Confederation (Rengo), Japan’s largest labor organization, has sought to increase total wages by 1 percent from last year, many labor unions in reality have given up on the goal of an across-the-board wage hike. Instead they are devoting their efforts to maintaining the traditional age-linked automatic pay-raise system. But the Japan Business Federation (Keidanren) began negotiations by hinting at freezing the automatic pay raise.

Offers made last week by major companies — including automakers and electronics firms — to labor unions show that the labor side has managed to somewhat roll back an offensive by management. Although bonuses this year have fallen from last year’s levels, the labor side has succeeded in keeping the age-linked automatic pay raise intact in most cases.

Among electronics makers, Sharp and NEC called for a new round of talks on reduction of personnel costs, which could include a freezing of the age-based automatic pay raise. But joining automakers, electronic makers such as Hitachi, Mitsubishi Electric, Panasonic and Toshiba decided to keep the automatic pay raise intact. This shows that among major electronic makers, business performances are not even. Among automakers, Toyota and Honda offered bonuses at levels demanded by the labor unions. But it must be noted that these labor unions had submitted bonus demands that were lower than last year’s bonuses.

The offers by major companies show that management has a sense of crisis about the current economic conditions and has given priority to ensuring that companies remain viable and maintaining employment. It may not be far-fetched to say that the labor side has tacitly accepted the idea that retaining jobs is more important than raising wages. Although wage negotiations at major companies are almost over, Rengo must do its best to help labor unions in medium and small companies, where negotiations are continuing. It also must help irregular workers.

For its part, management needs to work out a strategy to make their companies grow and improve their competitiveness. In the absence of such efforts, the Japanese economy will continue to weaken.

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