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Shunto spring wage negotiations have effectively begun with a meeting between Keidanren (Japan Business Federation) Chairman Masakazu Tokura and Japanese Trade Union Confederation (Rengo) President Tomoko Yoshino. It is hoped that labor and management will negotiate sincerely to establish a high level of wage increases that will overcome high prices.
Prior to the meeting, Keidanren 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. Keidanren said in the report that a high level of wage increases was realized in the shunto talks of 2023 and 2024, positioning this year as a “watershed” for locking in the wage increase momentum.
The report called for an active response on pay-scale increases to raise the level of base pay for employees. In the report, Keidanren went one step further by moving from last year’s description of the pay-scale increases as a “leading option” to this year’s statement that it is “desirable to consider wage increases with a pay-scale hike in mind.”
Households are struggling with their budgets due to high prices. Real wages, which reflect the impact of prices, have been on a long downward trend since April 2022 and have yet to turn steadily positive. If consumption runs out of steam, the transition to a growth-oriented economy, in which wages and investment both increase, could falter.
Listed companies are reportedly expected to continue to post strong earnings in the fiscal year ending March 2025. Internal reserves, the accumulation of profits, exceeded ¥600 trillion in fiscal 2023, and corporations should have surplus funds to increase wages.
Rengo intends to call for a wage increase of “5% or more” overall and “6% or more” for small and midsize enterprises, in combination with a pay-scale hike and regular salary increases. Management should be aware of its social responsibility and take a positive approach to raising wages.
There also is a shadow over the future.
This is because U.S. President Donald Trump has shown his intention to impose a 25% tariff on imports from Canada and Mexico. Japan’s auto industry, which has a leading role in the shunto talks, has production bases in both countries, and there are concerns that Trump’s tariff policy will deliver a serious blow to the industry. The strength of its resolve to raise wages will be tested.
Raising wages at small and midsize enterprises, which account for 70% of employment in Japan, is also a major issue. This is because the gap between their wages and those of large companies is widening. Large corporations need to make further efforts to ensure that small and midsize enterprises can properly pass increased raw material and labor costs on through their prices.
It is also important for small and midsize firms to promote efficiency by investing in ways to save on labor and personnel to create an environment conducive to higher wages.
Although Keidanren said a high level of wage increases has been achieved, why households are still struggling with their budgets amid high prices has become a pressing question among the public.
In some respects, the rise in import prices due to the weak yen and the effect of labor shortages have spurred high prices. It is also necessary for the government to reexamine the challenges facing the Japanese economy.
Raising labor productivity is essential for sustained wage increases. The government should not only ask companies to make efforts, but it should also map out measures of its own to help them increase productivity.
