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ECONOMY

Editorial: Wage hikes hold key for economic recovery from pandemic

  • March 23, 2021
  • , The Asahi Shimbun , 12:17 p.m.
  • English Press

Major Japanese companies are beginning to respond to labor union demands in this year’s “shunto” spring wage negotiations. 

 

In the electronics and some other industries, companies have offered pay-scale increases known as “base up” in Japan, indicating the upward trend in wages has not been disrupted. But wage gains have been far from substantial.

 

To accelerate Japan’s economic recovery from the damage inflicted by the new coronavirus pandemic, it is vital to secure as many pay increases as possible.

 

Labor unions have restrained their shunto demands this year. There have also been significant differences in levels of demand among industries and companies.

 

Negotiations have been tough in sectors that have taken a massive hit from the pandemic, including the transportation and restaurant industries.

 

In the early stages of management responses to labor demands, Hiroaki Nakanishi, chairman of the Japan Business Federation (Keidanren), the nation’s leading business lobby, praised the offers that have been made by management so far.

 

Nakanishi complimented them as “a message from top corporate executives about their commitment to maintaining the momentum of wage hikes to contribute to creating a virtuous cycle of the economy.”

 

Rikio Kozu, president of Rengo (Japanese Trade Union Confederation), Japan’s largest labor organization, concurred, saying the responses from corporate management so far are in line with the wage growth trend of the past several years.

 

It is, however, too early to tell whether the outcomes of the shunto round will justify such positive evaluations.

 

Both labor and management will face a hard reality check in the coming weeks.

 

Disappointing responses to labor demands in certain industries and companies have to be regarded as inevitable consequences of the global health crisis. But quite a few Japanese companies are showing strong earnings due to growing demand for products and services related to the digitization of the economy and increased hours spent at home as well as recovery in exports.

 

Companies that have suffered temporary damage from the pandemic but remain in good financial shape should continue boosting wages.

 

Given that the economy has been propped up by unusually expansive monetary and fiscal policies, we again urge top corporate executives to make wage decisions designed to help avoid a return to the deflationary vicious cycle.

 

Especially important are pay raises for employees at small and midsize firms and nonregular workers who are generally in weak positions and forced to work for relatively low wages.

 

The jobless rate temporarily rose above 3 percent for the first time in three years although the employment situation is beginning to show signs of improvement. The economic damage from the scourge of COVID-19 should not be allowed to be concentrated on a narrow swath of society.

 

Under the slogan of “a change of the distribution structure,” Rengo has pledged to pursue an overall rise in wage levels through efforts that are also aimed at securing fairness and equality in business transactions between large companies and their subcontractors.

 

This year’s shunto, which is unfolding amid harsh economic conditions, will really test Rengo’s ability to serve the interests of workers.

 

The situation requires the umbrella labor organization to step up its support for labor unions of employees at small and midsize companies and nonregular workers during the annual wage spring offensive.

 

Society as a whole should continue paying attention to this problem to ensure steady progress toward fair distribution.

 

Toyota Motor Corp., which was once a key driver of pay growth through shunto negotiations, has accepted all labor union demands this year but there were reportedly no discussions on wages during the negotiations.

 

Indeed, labor and management should engage in debate on a wide range of issues during shunto negotiations. But collective bargaining for fair and just wages for all workers is no less important now because of increasing diversity in work styles both within and among companies and industries.

 

Steady pay growth and stable economic expansion are two vital and inseparable factors for the nation’s economic health.

 

The Japanese business community is beginning to realize that wage levels in Japan have risen much slower than in many other countries during the years since the collapse of the asset-price bubbles in the late 1980s.

 

Japanese companies need to look beyond the current crisis and increase medium- to long-term investment in human resources so that the nation’s economic structure will not become dependent on low wages.

 

–The Asahi Shimbun, March 23

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