Collective Responses in Shunto Negotiations: High-Level Wage Increases Should Take Root

A number of major companies that tend to influence the direction of the shunto spring wage negotiations have announced pay increases that are significantly higher than those of the previous year. It is hoped that this trend will spread throughout society to ensure that the Japanese economy can break out of its prolonged slump.

Major companies in the automobile, electronics and other industries have responded across the board to their unions’ demands for higher wages.

In the automobile industry, Toyota Motor Corp. met the full amount requested for wages and bonuses, the largest wage increase since 1999, the earliest year for which comparable data exists. Honda Motor Co. and Mazda Motor Corp. met the full amount as early as February, and higher wage increases were seen at most automobile firms.

Eleven electronics companies, including Hitachi, Ltd., also offered a pay-scale increase of ¥13,000 per month to raise the base pay, as requested by their unions. This was significantly higher than the increase of ¥7,000 in the previous year.

It is noteworthy that major companies have decided to substantially raise wages to realize a virtuous economic cycle.

There were also some unusual responses that exceeded the unions’ demands. Nippon Steel Corp. responded with a wage increase of ¥35,000 per month, ¥5,000 more than requested. Suzuki Motor Corp. said it would raise wages by 10% or more, also exceeding its union’s demand.

In particular, the three major steel makers were usually similar to each other in what their unions demanded and how the firms responded, but that has now been shattered by the move by Nippon Steel.

In past shunto negotiations, there was a strong mentality that companies within the same industry should be in lockstep with each other, reflected by the tendency that even when a company performed better than other companies in the same industry, that company would keep its wage increases down to be in line with others. In the future, it is desirable to break out of this practice and raise wages as much as possible at companies with the leeway to do so.

High wage increases need to be extended to nonregular employees and small and midsize enterprises as well.

During the recession, Japanese companies increased the number of nonregular workers to adjust the employment situation. Currently, nearly 40% of the total workforce is nonregular. Nonregular workers are paid less than regular ones, and the increase in the number of nonregular workers has, in some ways, suppressed wages in Japan as a whole.

Aeon Co. has taken the lead in deciding on a policy to raise the hourly wage of part-time workers at its subsidiaries by 7% on average. It is hoped that companies will be aware that improving the treatment of nonregular workers is a social responsibility.

Small and midsize enterprises, which account for 70% of all employment, will begin their full-fledged shunto negotiations from now. Although they are being forced to raise wages due to a serious labor shortage, many smaller firms are struggling because they are unable to pass on rises in costs of raw materials and other expenses to their prices in their transactions with major companies.

Nissan Motor Co.’s unilateral lowering of the prices it paid to its subcontractors upon delivery, which were decided at the time the orders were placed, was found to violate the Subcontract Law. Some point out that the problem is not limited to Nissan.

In addition to complying with laws and regulations, major companies need to show the most consideration so that small and midsize enterprises can increase their prices to reflect rises in costs of wages and other costs.

(From The Yomiuri Shimbun, March 14, 2024)