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Focus: 2022 Shunto sees gaps in mood for pay hikes

  • January 26, 2022
  • , Jiji Press , 5:00 p.m.
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Tokyo, Jan. 26 (Jiji Press)–Hopes are growing for pay hikes at this year’s “shunto” annual labor-management negotiations in Japan at a time when a barrage of price hikes for such products as gasoline and foods are putting burdens on households.

However, earnings gaps among companies are overshadowing the outlook amid the lingering coronavirus pandemic.

The focus of this year’s shunto talks, which went into full swing this week, is how far income distribution, which Prime Minister Fumio Kishida emphasizes, can be realized, as services providers and others hit hard by the coronavirus crisis are struggling just to maintain employment. Shortages of semiconductors and soaring raw material prices are also weighing on businesses.

 At a labor-management forum meeting of the Japan Business Federation, or Keidanren, held Tuesday, Tomoko Yoshino, president of the Japanese Trade Union Confederation, also known as Rengo, stressed the need to change people’s deflationary mindset.

“The deep-rooted problem is that workers find it normal to be given no pay hike,” Yoshino said.

While other major economies of the world marked average wage rises of over 20 pct in 2020, compared with the levels in 1997, wage levels in Japan remained almost flat.

In the 2022 shunto negotiations, Rengo targets pay hikes of around 4 pct, including pay scale rises of about 2 pct and regular wage increases.

Behind the pay increase goal is a recovery in corporate earnings. According to a survey compiled last November by Sumitomo Mitsui DS Asset Management Co., combined fiscal 2021 group operating profits of 1,334 major companies that close their books in March, excluding financial firms, are expected to grow 35.1 pct from the previous year.

The Japanese Electrical, Electronic and Information Union, a federation of labor unions at electronics and other technology companies, and UA Zensen, a union covering a variety of industries including textile, chemicals, logistics and restaurant industries, plan to demand pay scale hikes of levels before the coronavirus crisis.

“Amid rising prices, if the levels of pay hikes turn out to be equivalent to or below those in the previous year, it will be hard to achieve a recovery in consumption,” UA Zensen chairman Akihiko Matsuura said.

Crude oil and other prices have been surging since last autumn, expected to be followed by price hikes for foods and daily necessities in Japan.

The Japanese government is taking the initiative for pay hikes, with Kishida having voiced expectations last autumn for pay increases of over 3 pct.

Although the prime minister stopped short of mentioning a uniform pay hike, his government decided to expand tax deductions for companies that raise wages.

Keeping pace with the government, Keidanren Chairman Masakazu Tokura said Tuesday that raising wages is a “corporate duty.”

Still, the mood for pay hikes is limited mainly to manufacturers, such as exporters benefiting from a weaker yen, while services providers and others are forced to put priority on recovering from the impact of the coronavirus crisis.

For the second straight year, the Japan Federation of Aviation Industry Unions forewent a numerical target for a uniform pay scale rise request.

Pay hikes also seem uncertain at small companies.

The government has reinforced the supervision of business deals involving subcontractors to protect them from exploitation by large companies and made requests to help small firms reflect higher crude oil and other costs in their transactions prices.

Katahiro Yasukochi, head of the Japanese Association of Metal, Machinery, and Manufacturing Workers, or JAM, said, “The biggest theme is transferring costs into the prices.” Large companies, however, also have uncertainties over their earnings.

The practice of making a uniform pay scale hike request for the whole of each industry is changing.

The Confederation of Japan Automobile Workers Unions, which has long been leading the annual pay negotiations, stopped short of demanding a uniform pay scale hike for the fourth consecutive year. “Across-the-board wage increases fail to fit with the times,” said an official at a major manufacturer.

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