Pay increases across all industries needed to help support livelihoods

Editorial

12:28 JST, March 17, 2022

Steady wage hikes are necessary to support the lives of people who are reeling from the coronavirus pandemic and suffering due to the rising prices of resources and food, among other things. Active pay increases by major companies during the shunto spring labor wage negotiations must spread throughout all industries.

Many major companies in the automobile and electrical industries, among others, have responded across the board to demands for higher pay and bonuses from their unions.

In an unusual move, Toyota Motor Corp. President Akio Toyoda indicated the company would pay the full amount requested by the union side in the first round of negotiations and the company reached an agreement one week before the date for the collective announcement of pay increases by many companies. In the auto industry, Honda Motor Co. and Nissan Motor Co. also accepted the requests of their unions.

Among major electrical appliance manufacturers, Hitachi Ltd., NEC Corp. and Toshiba Corp. offered a pay-scale increase for raising the level of base pay for employees, as requested by their unions.

It is noteworthy that amid growing economic uncertainty caused by Russia’s invasion of Ukraine, major companies are responding positively to wage increase demands.

Last year, many major companies offered no pay-scale increases due to the coronavirus pandemic, resulting in the average pay increase falling below 2% for the first time in eight years. The figure is highly likely to exceed 2% this year. It is important for companies to continue making efforts to raise wages.

Many observers have pointed out that the vitality of the Japanese economy has dampened due to a lack of wage growth over a longer period than in Europe and the United States. Prime Minister Fumio Kishida, who aims to achieve a “virtuous cycle of growth and distribution,” has expressed his hopes for corporate pay increases.

Inflation is accelerating worldwide due to supply constraints caused by such factors as logistics disruptions and labor shortages. The Ukraine crisis has compounded the situation.

As prices of gasoline, food and other products continue to soar in Japan, pay increases are vital to protect people’s livelihoods. There is a need to expand the trend of pay increases to small and midsize companies whose labor-management negotiations will be in full swing soon.

The cost burden due to rising prices of raw materials tends to be concentrated on small and midsize companies that are subcontracted by large companies. It is hoped that large companies that do business with small and midsize companies will allow them to pass on the increasing costs to their selling prices in an appropriate manner.

Pay increases at small and midsize companies, which account for 70% of employment in Japan, help shore up the income of the middle class. Efforts also should be made to improve the labor conditions of nonregular workers.

Some major companies, such as airlines, railway firms and dining establishments, are still struggling due to the coronavirus pandemic. For the time being, it is hoped that these sectors will strive to improve earnings for raising wages, through such measures as creating new businesses while maintaining employment levels.

In addition to the efforts of the private sector, the government’s support is also needed to help raise incomes.

The government will strengthen tax breaks to encourage companies to raise pay, but companies losing money will not be eligible. Multifaceted support measures are needed, such as the expansion of subsidies that can be received by companies even if they are in the red, and the promotion of steps to facilitate the movement of human resources to growth areas where higher wages can be expected.

— The original Japanese article appeared in The Yomiuri Shimbun on March 17, 2022.