Smaller Companies Must Follow Lead of Major Firms by Accepting Pay Demands

Many major companies offered to meet the full amount requested by their unions in the shunto spring labor wage negotiations amid soaring prices. This trend must spread among small and midsize companies and become a turning point to realize sustainable wage growth.

Many major companies in the automobile and electrical industries, among others, responded to their unions’ wage demands in this year’s shunto. Among 12 major electronics manufacturers, including Hitachi Ltd. and Toshiba Corp., each offered to fully accept the labor side’s demand for a pay-scale rise of ¥7,000 per month.

The companies’ unions coordinated their demands as is customary. However, this is the first time the full amount demanded by the labor side was accepted by the companies across the board.

In the automotive industry, Toyota Motor Corp. and Honda Motor Co. led the entire industry by meeting the full amount requested by their unions ahead of the designated response date. All 12 major automakers accepted the full amounts requested by their unions in the negotiations. Mitsubishi Heavy Industries Ltd. also responded in accordance with the labor union’s demand for the first time in 49 years. Major manufacturing companies have agreed to high wage rises across the board.

Raising wages has become a social responsibility for corporations amid surging prices. It is only inevitable that a movement has spread among major companies to actively raise wages.

Offers from some companies exceeded the demands of the labor unions. Japan Airlines Co. offered a pay-scale rise of ¥7,000 per month, ¥1,000 more than the largest labor union had demanded. Zensho Holdings Co., a major restaurant chain operator, also decided to raise wages by 9.5%, exceeding the labor union’s demand.

Several companies have raised starting monthly salaries significantly. This might be because such companies believe it is necessary to improve working conditions for employees in the face of fierce competition for human resources.

Wages have been stagnant in Japan for many years. Triggered by high prices, the current momentum for wage increases must not end up being a passing phenomenon. It is important to connect the trend to steady efforts to achieve a virtuous cycle in the economy, in which rising incomes vitalize consumption.

To this end, it will be essential to raise wages at small and midsize enterprises, where labor-management negotiations are about to get underway in earnest. This is because they account for 70% of employment in this country.

For the first time in eight years, this year’s shunto included a tripartite meeting, in which the heads of the government and business and labor circles exchanged opinions. The aim was to encourage small and midsize companies to raise their wages by improving the current situation in which many are unable to pass on increasing costs through their selling prices in their transactions with major companies.

The government has indicated that it will conduct a fact-finding survey and compile guidelines to enable small and midsize companies to pass on increased labor costs, in addition to the increasing costs of raw materials, through their sales prices. Large companies should cooperate with small and midsize companies’ efforts to raise wages from the perspective of shoring up the economy as a whole.

The burden of raising wages is heavier for small and midsize enterprises, which have weaker business foundations than those of large companies. However, it is hoped that they will remember that protecting the livelihood of their employees is also a major responsibility of the management side.

(From The Yomiuri Shimbun, March 17, 2023)