Japan Press Weekly

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2015 September 16 - 29 [LABOR]

Corporate practice to hold down labor cost causes drop in wages

The corporate practice of holding down labor costs causes workers’ wages to actually decrease. The Labor Ministry itself has recently admitted to this fact.

Analyses the ministry published on September 15 point out that wage levels of employees have not gone up despite a significant improvement in labor productivity. It is because, the ministry states, employees are placed outside the parameters of profit distribution.

The government report states that corporate net earnings are devoted mainly to the area of corporate internal reserves and dividend payments, and that large corporations in particular have allotted a remarkable portion of profits for securities investments.

An increase in the number of non-regular workers also pushes down the amount of wages per worker, according to the report.

The report shows that 90% of the non-regular jobs created in the past decade was for over 60-year-old men and women in addition to some under 60-year-old women. The ministry found that the wage bracket these people fall in is low and this leads to a decline in overall wages.

Noting that the level of agreed upon wages after labor-management negotiations is relatively high in corporations where unions exist, the ministry concludes that unions which maintain a strong bargaining position can play a major role in pushing up wages as individual workers have an extremely limited ability to negotiate.

Past related article:
> Large corporations’ internal reserves hit record high under ‘Abenomics’ [September 3 and 4, 2015]