The annual wage negotiations for 2012 take place in a difficult situation marked by the effects of the March 11 disasters, the floods in Thailand, prolonged deflation and the strong yen. Labor and management must search for a wage level that is not only reasonable but also will eventually contribute to strengthening the Japanese economy as a whole.

Kicking off wage negotiations, Mr. Hiromasa Yonekura, head of the Japan Business Federation (Keidanren), Japan’s most influential business lobby, on Jan. 25 met with Mr. Nobuaki Koga, head of the Japanese Trade Union Confederation (Rengo), Japan’s largest labor organization. Rengo seeks to increase the total volume of wages by 1 percent from the previous year.

Mr. Yonekura said that given the current economic situation, such a wage raise is out of the question. He even hinted at freezing the traditional age-linked automatic pay-raise system.

Keidanren said that facing the strong yen, power shortages and weak economic activities due to the March 11 disasters, manufacturing firms are being forced to make hard decisions on whether they should keep their production bases in Japan or move them abroad. It said that priority should be given to securing employment opportunities, rather than pay raises.

But in the past 10 years, Japanese workers’ wages declined by about 10 percent. The average annual wage for a private sector worker in 2010 was about ¥4.12 million, a drop of some ¥490,000 from 2000. Irregular workers make up more than 30 percent of Japan’s work force and the annual wage is less than ¥2 million for one out of every four Japanese workers.

Mr. Koga stressed the importance of raising wages, which he said would increase consumer spending, thus helping to end deflation. He said that priority should be given to nurturing human resources. Keidanren should not forget that the age-linked automatic raise system helped build trustful relationship between labor and management.

The negotiations will not be easy. But labor and management must do their best to create an environment in which employees can work without worries, have strong loyalty to their companies and give full play to their abilities. This would help produce high-value-added goods and services.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.