Wage negotiations in Japan begin with unions, business must agree to wage increases

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The heads of Japan’s largest labor group and top business lobby met Monday to discuss the country’s labor market as annual negotiations on union management began, with both sides agreeing on the need for significant wage increases to offset the impact of high inflation.

Tomoko Yoshino, head of the Japanese Trade Union Confederation, addresses a meeting with the top business lobby Japan Business Federation on January 23, 2023 in Tokyo. (TBEN)

Tomoko Yoshino, the head of Rengo, or Japan’s trade union federation, called for wage increases, including base salary increases, to ease the pain associated with the fallout from the coronavirus pandemic and recent rapid inflation. She said this year “should be a turning point in changing our future” through sustained pay increases at companies of all sizes across the country.

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Masakazu Tokura, the president of the Japan Business Federation, better known as Keidanren, agreed on the importance of wage increases to meet economic challenges at the meeting of the two organizations.

“We call on (company managers) to provide aggressive responses by taking due account of prices and fulfilling their social responsibility to support or even amplify the momentum of wage increases,” Tokura said.

Core consumer prices in the country rose 4.0 percent from a year earlier in December, the highest level since 1981, while real wages in Japan fell for the eighth consecutive month in November, according to the latest available government data.

Masakazu Tokura, President of the Japan Business Federation, addresses a meeting with the largest trade union organization, the Japan Trade Union Federation, on January 23, 2023 in Tokyo. (TBEN)

Rengo has already said it will target a wage increase of about 5 percent in this year’s so-called shunto spring negotiations, the highest raise demanded by the group in 28 years. It wants more than half of that raise to come from a base pay increase and the rest from a regular annual raise based on seniority.

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According to Rengo, the average wage increase in last year’s shunto was 2.07 percent, but government data shows that the country’s real wages fell for eight consecutive months through November due to workers’ reduced purchasing power.

Keidanren has urged member companies to try to increase base pay, though it has said any company should think carefully about meeting Rengo’s wage demands.

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Prime Minister Fumio Kishida has called on business leaders to implement wage increases to offset rapid inflation.

Economy, Trade and Industry Minister Yasutoshi Nishimura said on Monday that he expects companies with good earnings to deliver wage increases of 5 percent or more.

Major company unions are expected to submit their requests to management by mid-February, and most of them usually get a response by mid-March.


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