Work to Preserve Momentum for Pay Raises in Spring Wage Negotiations

With the spread of the novel coronavirus, this year’s labor-management wage negotiations are expected to be more difficult than usual. Labor and management need to strive for wage hikes in line with companies’ reality, while working together to give top priority to securing employment.

The Japan Business Federation (Keidanren) has released a report from its Committee on Management and Labor Policy, setting out employers’ basic stance regarding the shunto spring wage negotiations.

The report stressed that across-the-board wage increases in the same industry or uniform wage hikes by each company, are “not realistic” because corporate earnings have become polarized due to the coronavirus crisis.

A pay scale increase — which raises the level of base wages — will be difficult for companies for whom an earnings recovery is not foreseeable, the report said. However, a pay scale hike can be “an option” for companies that are making good profits.

This is the first time the report has made it clear that policies on wage negotiations differ according to companies’ performance. It is natural for companies to get out of across-the-board wage increases and set wage levels based on their earnings.

By industry, the transport and steel sectors are expected to post deficits, and the automobile sector is likely to see a sharp drop in profits. In contrast, profits are expected to increase in the communications and software-related industries, taking advantage of strong demand from people staying at home.

Stable wage increases are essential to overcome deflation by stimulating personal consumption and creating a virtuous economic cycle.

While it is inevitable to place importance on maintaining employment rather than increasing wages when companies fall into dire straits, companies with surplus capacity must continue to make efforts for wage hikes. As of the end of March last year, companies’ internal reserves had ballooned to ¥475 trillion.

Government-led spring labor-management wage negotiations, in which the government asks Keidanren to raise wages, have continued since 2014. Large companies’ wage growth topped 2% last year for the seventh straight year. This momentum should not be stopped.

How labor and management will deal with changes in how they work amid the coronavirus crisis is another major issue of this year’s shunto.

As teleworking spreads among many companies to prevent infection, issues including the difficulty of communications among employees and the management of working hours have been highlighted.

According to a Keidanren survey on companies, the percentage of respondents that said their productivity and operational efficiency had fallen exceeded those that said they had improved. This will be a good opportunity to find a solution to the problem of how to establish flexible work styles while improving productivity.

It has been pointed out that the impact of the coronavirus pandemic has widened the gap between regular and non-regular workers, as the latter are more vulnerable.

The social costs of rescuing those who have borne the brunt of the negative impact, such as contract and part-time workers, are increasing. It will be important for companies to further facilitate the improvement of working conditions for non-regular workers, a subject that has been discussed in the shunto negotiations in recent years.

— The original Japanese article appeared in The Yomiuri Shimbun on Jan. 21, 2021.