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Editorial: Unions, management must cooperate to overcome difficulty of wage hikes

  • March 12, 2020
  • , The Japan News , 12:48 p.m.
  • English Press

As a whole, wage negotiations have turned out to be tough for employees.


In the shunto spring wage negotiations at major companies, including automakers and electronics manufacturers, management presented at the same time responses to their unions’ requests for wage hikes.


Company after company offered wage hikes lower than in the previous year. With infections of the new coronavirus spreading, the outlook for the global economy has become more uncertain. This appears to be having a great impact on the wage negotiations.


In the business year ending in March, the number of companies that will see their profits decline significantly or fall into the red is expected to increase. There is an aspect of inevitability to the management side becoming cautious about wage hikes due to concerns over rising labor costs.


In a symbolic move, Toyota Motor Corp. shelved a base pay hike for the first time in seven years.


The average monthly raise offered by Toyota, including regular pay increases, was ¥8,600, which is ¥2,100 lower than the previous year. As competition in the automobile industry has been fierce, a strong sense of crisis over the business environment can be seen.


The company may have intended to change its wage system to a merit-based one instead of increasing wages almost across the board through pay scale hikes. This could be a turning point for Japanese-style employment, which is exemplified by the seniority system.


However, the importance of continuing wage hikes remains unchanged. Companies with financial reserves are urged to agree to wage increases as much as possible.


The management side should make efforts to improve employees’ motivation such as by creating workplaces that will make it easier for them to bear and raise children and improving welfare programs.


It is noteworthy that in the electronics industry the lock-step manner in which unions traditionally demand wage hikes across the board and management gives a uniform response to the demand has broken down.


These labor unions together called for a pay scale hike of ¥3,000 per month, and Hitachi, Ltd. offered a hike of ¥1,500. On the other hand, Mitsubishi Electric Corp. and Fujitsu Ltd. agreed to a ¥1,000 raise.


Panasonic Corp. responded with a hike of ¥1,000, but this is not only for a pay scale hike and includes defined contribution corporate pension payments.


Even within the same industry, differences in business type and profitability are growing among companies. It comes as no surprise that their responses to the unions’ demand varied.


It is significant that labor unions unite to confront management, but each union is likely to be tested further in the future over its strategy and bargaining power.


The shunto wage negotiations are set to begin in earnest for small and midsize companies. Tough talks are expected. About 70% of employees work for small and midsize companies, and the impact of the talks’ results on the economy is not insignificant.


To protect employment, the labor and management sides must work together and rack their brains to overcome this difficult situation.


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