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Companies have a major role to play in helping Japan’s economy completely overcome deflation and move into a virtuous cycle of growth. It is hoped that both labor and management will share this attitude as they approach the shunto spring wage negotiations.
The Japan Business Federation (Keidanren) has released its Report of the Special Committee on Management and Labor Policy, which will guide the management side’s policy for the shunto negotiations this year.
The report emphasizes that this year’s shunto negotiations are extremely significant for sustainable economic growth, clearly stating that it is the responsibility of companies to aim for structural wage increases from the social point of view in the face of prolonged price hikes.
On top of that, the report uses the expression “with more enthusiasm and determination than in 2023” to urge member companies to raise wages above the previous year’s increase.
According to the Japanese Trade Union Confederation (Rengo), the average wage increase rate in last year’s shunto negotiations was 3.58%, the highest level in 30 years. However, real wages, excluding the effect of rising prices, continued to decline for consecutive months on a year-on-year basis through November 2023. It is essential for the wage increases in this year’s shunto negotiations to exceed the rise in prices.
Pay scale increases to raise the levels of base pay for employees will be especially important. Since these will be reflected in bonuses and retirement benefits, they will greatly benefit workers.
Last year’s report stated that “it is desirable to positively consider” pay scale increases. However, in this year’s report, the wording is strengthened to “a leading option” and companies are asked to take strong action.
In the fiscal year ending March 2024, the combined final earnings of major listed companies are expected to reach a record high. Internal reserves, the accumulation of companies’ profits, exceeded ¥550 trillion in fiscal 2022. Large wage increases, including pay scale rises, are likely to be sufficiently possible.
It is hoped that each company will fully understand the purpose of the report and strive to raise wages as much as possible.
The momentum for wage increases at major companies must be extended to small and midsize enterprises as well. The report calls for major companies to allow small and midsize firms that they do business with to raise transaction prices so that smaller enterprises can readily increase wages.
Major corporations should be aware that it is their responsibility to strive to ensure that wage increases spread throughout society. The business community as a whole needs to change its mindset of giving top priority to cost cutting.
The shunto negotiations can also be described as important in addressing the serious decline of the birth rate.
A sense of stability in livelihood is indispensable to enable employees to give birth and raise children with peace of mind, and to that end, continued wage increases are vital. Work style reform, such as fixing the situation of long working hours, must also be promoted.
It is hoped that this year’s shunto negotiations will involve discussions from the social point of view, bearing in mind measures to vitalize the economy as a whole and improve the declining birth rate.
