Japan wage talks start with unions, firms agree wage hikes needed

The heads of Japan’s largest labor organization and top business lobby group met on Monday to discuss the country’s labor market as annual union-management talks kicked off, with both sides agreeing that big wage hikes are needed to offset high inflation.

Tomoko Yoshino, head of the Japan Confederation of Trade Unions, spoke at a meeting with top business lobby group Japan Business Federation on Jan. 12. 23, 2023, Tokyo. (Kyodo)

Tomoko Yoshino, head of the Japan Confederation of Trade Unions (Rengo), has called for wage hikes, including an increase in base wages, to ease pain related to the impact of the coronavirus pandemic and recent rapid inflation. This year, she said, “should be the turning point that changes our future” through continued wage increases at companies of all sizes across the country.

Keidanren chairman Masakazu Tokura agreed at a meeting of the two organizations on the importance of wage increases to overcome economic challenges.

“We call on (business managers) to respond positively by giving due consideration to prices and fulfilling their social responsibilities to maintain or even strengthen wage upward momentum,” Tokura said.

Japan’s core consumer prices rose 4.0% year-on-year in December, the highest level since 1981, while real wages in Japan fell for the eighth straight month in November, according to the latest government data.

On Jan. 1, Masakazu Tokura, president of the Japan Federation of Business Federation, spoke at a meeting with the largest labor organization, the Japan Confederation of Trade Unions. 23, 2023, Tokyo. (Kyodo)

Rengo has said it will target a pay increase of around 5% in this year’s so-called Ivy League negotiations, the highest the group has demanded in 28 years. It expects more than half of the increase to come from base salary increases, with the remainder coming from regular annual raises based on seniority.

Average wages in Chundou last year rose 2.07 percent, according to Rengo, but government data showed real wages in the country had fallen for eight straight months as of November as workers’ purchasing power declined.

Keidanren has urged member companies to try to raise base wages, though it said each company would need to think carefully about meeting Rengo’s wage demands.

Japanese Prime Minister Fumio Kishida called on business leaders to raise wages to offset rapid inflation.

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

Unions at large companies are expected to submit requests to management by mid-February, with most typically receiving responses by mid-March.

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