Editorial and Japan Wages: Ideas Later

 

Editorial: Big firms are raising wages, but trend must reach entire Japanese economy

Article Source:  https://mainichi.jp/english/articles/20240314/p2a/00m/0op/012000c

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Japan's annual spring labor negotiations have reached their peak, and major manufacturers such as Toyota Motor Corp. and Panasonic Holdings Corp. have fully accepted labor unions' demands for higher pay. There is also a trend of improving conditions in the food and retail sectors, with many companies announcing raises for new hires.

But it is important to make sure wage increases reach all of Japan, so that people feel that we are in a positive economic cycle.

Historically high prices persist, and labor shortages are worsening. Companies unable to offer wages commensurate with job responsibilities are finding it difficult to attract talent. It is likely a sense of crisis over this situation that has prompted management's receptive attitude.

Wage increase rates are expected to surpass those seen in 2023, reaching levels not seen in about 30 years. This is a welcome development for Japan, where pay has long been stagnant.

However, early agreements have primarily involved large corporations. Negotiations for wage increases at small and medium-sized enterprises, which employ about 70% of Japan's work force, are yet to intensify. Whether the positive trend set by the big firms spreads to their smaller peers is crucial.

While the Nikkei Stock Average has reached record highs, many of Japan's residents do not feel an improvement in the economy. Real wages, adjusted for price changes, have been negative for 22 consecutive months, indicating that pay has not kept up with inflation.

Large corporations should strive to take the lead in creating an environment where their business partners can easily move to improve their own workers' employment conditions. And we urge proactive negotiations to ensure that escalating labor costs are adequately reflected in transaction prices.

Recently, cases of "bullying" by business partners have surfaced, such as those involving Nissan Motor Co. and membership-based retail giant Costco Wholesale Japan Ltd. Allowing dominant corporations to plunder the profits of their smaller business partners will result in a withering supply chain. It's urgent to eradicate these malpractices.

There is an urgent need to raise the wages of nonregular employees as well. It's imperative for major companies to take the lead in improving conditions to rectify disparities.

The Japanese economy is at a critical juncture, with one road leading to escaping its prolonged deflationary stagnation, and the other to more of the same. Expanding investments in people will be the driving force behind the former. Labor and management must continue efforts to enhance productivity and enable sustainable wage increases through cooperation.