Spring Wage Negotiation Starts

The Spring Wage Negotiations started on Wednesday. In the labor-management forum held by Japan Business Federation, or Keidanren, both sides concurred on aiming at increasing their workers’ wage to the level higher than last year. The key to success in bringing Japanese economy a “positive cycle” of wage and price is how small- and midsize-businesses can raise their wages.

Annual wage negotiations between workers and employers begins with that forum, in which the management side show its basic stance for the negotiations. The Chairman of Keidanren, Masakazu Tokura, insisted on high wage hike beyond the growth of consumer prices. “It is social obligation of the enterprises to aim at wage hike not lagging behind of price increases, with zeal and determination beyond the last year,” said Tokura in the forum.

 

Japanese Trade Union Confederation, or Rengo, demands “more than 5%” of wage hike this spring, higher than “around 5%” of last year. “This is a crucial moment to make a change toward the stage on which economy, wage and price will stably rise,” said President of Rengo, Tomoko Yoshino. “The most important point is sharing recognition of the problems and continue sustainable wage hike,” she added.

 

Sustainable wage hike is also one of the main political agenda for Prime Minister, Fumio Kishida. In the meeting with both sides of labor and management, Kishida requested increase of wages more than the level of last year. “It is important to secure the financial resource for wage hike through adding necessary cost on prices,” Kishida said in the meeting, expecting positive actions in small and mid-size businesses.

 

According to the research by Ministry of Health, Labor and Welfare, average ratio of wage hike in the major companies with more than one thousand employees was 3.6 % last spring, increasing by 1.4 points from the previous year. That was the highest level in these thirty years. Workers and managers hope further increase this year. Bank of Japan estimates consumer price index to be 2.2 to 2.5 % in FY 2024. The wage hike this year needs to exceed CPI to achieve positive real wage.

 

Some major companies have already announced high level of wage hike this spring. Nikkei Shimbun reported that Asahi Breweries and Kewpie plan to raise the wages by 6% this spring. However, small or mid-size businesses, which occupy about 70% of all employments in Japan, generally cannot afford financial resources to the wage hike, compared to the major companies.

 

There are two ways to raise wage: increasing base wage and annual increase. Increasing base wage affect the balance of a company more than annual increase. Whether the companies can raise base wage will show how serious they are trying to achieve the goal.

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