This year's season for annual wage negotiations has entered an important phase, as seven of the nation's eight major automakers have fully accepted labor unions' bonus requests, and all major electronic makers have agreed to maintain age-based automatic annual salary increases. For the first time since before the Lehman Brothers shock in the autumn of 2008, the wage situation for Japanese workers has brightened. But anticipating difficult economic conditions, the labor unions have refrained from calling for across-the-board base wage raises.
It's conceivable that companies anticipating good business prospects might have agreed to increase base wages had the labor unions pushed for it. Both labor and management should realize that unless workers' wage bases are raised, it will be difficult to lay a solid foundation to create a virtuous circle of economic activities.
Wage negotiations are continuing for major companies that mainly rely on domestic demand as well as for small and medium-size enterprises. If executives of these firms can foresee better business prospects, they should respond positively to labor unions' requests. Increased wages will lead to increased consumption, thus helping to pull the Japanese economy out of two decades of deflation and putting it on a path of recovery.