Japan Press Weekly

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2019 January 23 - 29 [LABOR]

Keidanren’s policy on 2019 wage talks shows negative attitude to drastic pay increase

The Japan Business Federation (Keidanren) on January 22 published its annual report regarding the business circle’s strategy for this year’s spring wage talks. The report compiled by the Keidanren Special Committee on Management and Labor Policy takes a negative stance toward a wage increase, an earnest demand made by workers and the general public. This has made it clear that the Abe government’s initiative for a pay raise has lost its influence. It is becoming even more important for the current Japanese labor movement to stick to its fundamental strategy of confronting the management with unified wage demands and concerted efforts.

Keidanren in the last year’s report said that Prime Minister Abe Shinzo’s remark about a 3% wage hike reflects social expectations for higher wages. However, this year’s report states that a pay raise offer should not be made at the request of the government, implying that the business world and large corporations should have the lead in setting wages. It underscores the need of curbing wages by stating that each company decides its pay scale based on its ability to pay under an “appropriate labor cost management”.

Real wages remain sluggish

The Abe government had to request a wage hike last year because despite the fact that large corporations were making huge profits due to “Abenomics” economic policy, they just added to their internal reserves and as a result real wages did not go up and the Japanese economy was not showing a healthy expansion.

Government statistics suggest that workers are experiencing low wages, even though some statistical data were allegedly manipulated to make government economic policies look effective. Personal consumption decreased by 4.3% in five years from 2012 when the Abe government was established, according to the labor thinktank Japan Research Institute of Labour Movement. The number of workers classified as “working poor” who earn less than two million yen a year has topped the 10 million mark for twelve straight years from 2005. It is unacceptable for large corporations to abandon their social responsibility to offer a pay raise, which is essential to improve people’s livelihoods and put the economy back on a healthy growth track.

This year’s Keidanren report criticizes unions’ unified demands for a basic pay raise as going against the current of time. It insists that a wage increase should be carried out on an annual income basis through various measures such as with higher bonuses. This proposal, however, could widen the disparity among workers. The amounts of bonuses differ widely depending on company sizes and profitability levels. It is often the case that workers in small- and medium-sized companies and non-regular workers are not paid bonuses. An increase in the monthly basic wage is vital as it affects all workers.

Tax hike and internal reserves

The report expresses concern about the proposed consumption tax hike to 10% and suggests the need to pay close attention to the possible negative impact on the nation's economy. At the same time, however, the report stresses that the 10% rate is vitally necessary and must be implemented without delay. Keidanren should understand that negative effects due to restraint on wage increases and the heavier tax burden will certainly rebound on business operations as a whole.

Regarding the huge amount of corporate internal reserves, the report last year stated that an excessive increase in reserves is unacceptable "from investors' perspective". However, this year's report suggests that internal reserves should be increased to an adequate level by stating that it is of growing importance.

The target of a 25,000-yen per month rise in wages as called for by the National Confederation of Trade Unions (Zenroren) and the People's Spring Struggle Joint Committee will become possible with the use of 2.98% of the 667.3 trillion yen in internal reserves (FY2017) amassed by all corporations in Japan.

The key for labor unions to achieve victories in this year's spring labor offensive is to move forward together in pressing united demands and engaging in united struggles while fighting back against wage restraints promoted by the business community and large corporations.

Past related article:
> Worker-oriented reforms plus \25,000 wage hike will push up GDP by \34.8 trillion: Labor thinktank [January 17 & 21, 2019]