Kishida Seeks Bigger Wage Growth than in This Year’s “shunto”

Jiji Press

17:44 JST, November 16, 2023

TOKYO (Jiji Press) — Prime Minister Fumio Kishida on Wednesday asked business leaders to raise wages in next year’s “shunto” spring labor-management negotiations more than they did this year.

“In order to free the country completely from deflation, we want your cooperation for wage hikes exceeding levels achieved this year, based on price conditions,” Kishida told a meeting of the government with representatives from labor and business groups.

“The government will take unprecedented steps to increase disposable incomes, including for wage increases,” Kishida said.

Along with expanding tax incentives to encourage wage growth and an individual income tax cut in June next year, the government will take additional measures to ensure equal pay for equal work and provide more support for the conversion of nonregular workers to regular employees, Kishida said.

The meeting also discussed measures to reflect higher labor costs in prices. Kishida said the government will present guidelines in late November to promote such moves.

The three-way meeting was held for the second time this year. The previous one, which took place in March, marked the first such gathering in eight years.

Participants included Tomoko Yoshino, president of the Japanese Trade Union Confederation, or Rengo, and Masakazu Tokura, chairman of the Japan Business Federation, or Keidanren.

“Let’s completely get rid of deflation through a public and private sector partnership,” Tokura told the meeting. Later, he told reporters, “We’ll focus on small and midsize companies and nonregular employees and do what needs to be done without missing this opportunity.”

Rengo plans to demand pay hikes of at least 5 pct in next year’s shunto.

Through the three-way meeting, Kishida intended to confirm the significance of wage hikes among the three parties before Keidanren adopts its shunto guidelines for management early next year.

“I was able to confirm that all of us are looking in the same direction,” Yoshino told reporters.

At the meeting, the prime minister promised to make “all-out efforts” to realize solid wage growth, showing a clear determination as public approval ratings for his cabinet fell to the lowest levels since his inauguration in 2021.

In this year’s shunto, major companies fully approved the pay hike requests from labor. But government statistics show that consumer price increases have outpaced nominal wage growth.

Whether the wave of pay rises will fully spread to smaller businesses hinges on how far such companies are able to raise prices, analysts say.