Shunto Spring Wage Talks Begin: Wage Increases a Fundamental Way to Fight High Prices

Editorial

14:51 JST, January 30, 2026

The fundamental approach to dealing with prolonged high prices is to move ahead with substantial wage increases. It is hoped that labor and management will share the recognition that this year’s shunto spring wage negotiations are a critical moment and proceed with negotiations.

Shunto negotiations have effectively begun with a meeting between Japan Business Federation (Keidanren) Chairman Yoshinobu Tsutsui and Japanese Trade Union Confederation (Rengo) President Tomoko Yoshino. The focus is on whether wage increases exceeding 5% will be achieved for a third consecutive year, following 2024 and 2025.

Keidanren’s negotiation policy positions raising the level of base pay for employees through pay-scale increases as the “standard for wage negotiations.” It is praiseworthy that Keidanren went one step further than last year’s statement that it is “desirable to consider wage increases with a pay-scale hike in mind,” indicating its determination to take the lead in wage increases.

High inflation exceeding 2% on a year-on-year basis began in spring 2022. Spring negotiations have achieved high levels of wage increases, but these have failed to keep pace with rising prices, resulting in a trend of real wage contraction for nearly four years. It is quite natural that a sense of stagnation is growing among the public.

Among economists, the prevailing view is that the inflation rate for the first half of this year will fall below 2% compared to a year earlier. These shunto negotiations are a time when the Japanese economy should emerge from a long tunnel, turning real wages into positive growth. It will be important for labor and management to stand on this recognition and engage in negotiations.

The performance of large corporations remains generally robust, as a result of curbing the adverse effects of the high tariff policy of U.S. President Donald Trump’s administration. Corporate internal reserves amount to about ¥640 trillion, indicating ample capacity for wage increases. Companies should proactively move toward higher wage increases.

Spreading these wage increases to small and midsize enterprises, which account for about 70% of all employment in Japan, is also a major challenge. The government should strengthen monitoring so that smaller companies can smoothly pass on increases in raw material and labor costs in their transaction prices.

In the upcoming House of Representatives election, major parties, such as the ruling Liberal Democratic Party and the Centrist Reform Alliance, have pledged consumption tax cuts or abolition. However, these are unreasonable measures to counter rising prices.

This is not merely because the consumption tax is a core funding source for social security, including medical and nursing care, and pensions.

Amidst a noticeable labor shortage, tax cuts that further boost demand could become a factor in pushing up prices instead. If investors perceive this as a retreat from fiscal consolidation, there is also concern that it could encourage the yen’s further depreciation and accelerate inflation.

The correct prescription for high prices is for companies to improve productivity and profitability, leading to higher wage increases.

It is also crucial for the government to maintain fiscal discipline and for the Bank of Japan to raise interest rates at the appropriate time, in an effort to stabilize prices. Only when the government and the private sector work together like the two wheels of a cart, is it possible to overcome high prices.

(From The Yomiuri Shimbun, Jan. 30, 2026)