Many Japan firms agree to unions' wage hikes demands amid inflation\
Ideas:
Japanese labor unions never have a wage or labor strike compared to other countries such as the US or South Korea, which always have union strikes. There is something about the character or relationship between Japanese companies and labor unions that seem to always prevent strikes, even if they don't get what the want from company management.
In South Korea, for example there is an adversarial relationship between management and unions but in Japan its the complete opposite, which keeps them either talking or in some cases just accepting what is as is, and it can't be helped.
Regarding Japanese small and midsize companies, which employ around 70 percent of the Japanese workforce, they too need wage increases and the wage increases need to be large enough to overcome the continuous inflation situation that has been in Japan since the pandemic.
Yes, Toyota is the trend setter and the quasi leader among major name-brand companies in Japan, and back in the early 2000's Toyota decided to not give any wage increasing, citing what was/is happening in China for lack of a wage increase, so all companies in Japan decided they too were not going to give any wage increases that year, and it was like that in many ways until a few years ago.
Wages in Japan, compared to other advanced countries are very low and even CEO salaries in Japan are not even close to what CEO salaries are in the EU and the US.
Not all large firms can give the hefty wage hikes that Toyota is giving but that is understandable and not all large companies have the resources that Toyota has to give a wage increase of 24,450 yen of $165 per month wage increase.
And certainly not all small and midsize companies can match that amount or even get close to it and some or maybe many might not be able to give any wage increase as their profit margins are stretched too thin from material and or energy costs.
The challenge is of course Japan is in a labor shortage crisis and many companies need and or want to increase wages to keep the employees they have now or attract new employees to their company.
The government needs to do as much as it can to help small and midsize companies, as there are reports that suggest some small and midsize companies are going bankrupt because of the labor shortage, meaning they can't find enough workers to meet the demand for their company.
The Japanese government needs to have a full-blown approach to maybe bring in foreign workers to help the small and midsize companies that are on the brink of going out of business, but unfortunately its takes time for immigration to process the new workers and it takes time for the new workers to learn enough Japanese to be able to work in the companies, as the Japanese companies probably are not very diverse and only speak Japanese.
Or the Japanese government can just let the market decide who will survive and who will go out of business, and kind of reducing the number of small and midsize companies and those that survive are the winners.
Unfortunately that is not a very humane way to do things people and workers families will be greatly affected and the Japanese economy, if too many small companies go out of business the Japanese economy will back in a stagnation situation with no one really winning anything.
The Ukraine situation might be a cause for some of the inflation, but its not the cause of all of the inflation in Japan. Price increases have been going on in Japan ever since the pandemic and one of the biggest challenges is companies, many companies, have been passing-on their material and energy costs to the next in the supply chain including the final retail customer.
For a very long time, many or most Japanese companies were reluctant to pass-on their costs to the next in the supply chain and they felt they would lose too many customers or supply chain partners, but those days seem long gone and many or most companies, and especially small and midsize companies now have profit margins that are stretched too thin and need to pass-on their costs to stay in business.
Yes, the Bank of Japan is watching very carefully what is going on with the wage negotiations, but it has been suggested, in the latest news, that the BOJ is not going to increase the key rate anytime soon due to uncertainty with the tariff situation in the US.
And companies like Mitsubishi might be increasing wages as a strategy to try and keep their current employees and also trying to attract new employees to their company.
But, again, maybe not all companies can increase wages like Mitsubishi or even Toyota to try and attract new employees or even to keep their current employees.
It seems or looks like many of the large name-brand companies are giving large wage increases, but the challenge might be will the wage increase stay ahead of inflation and or will inflation, which might increase every could overtake the real wage benefits employees might get.
On the upside if all of these companies do what they say they are going to do, that could be a major paradigm shift in the Japanese economy, at least for large company employees who might finally feel good enough about their wage increases to start spending in the economy again.
But then again, if the small and midsize companies don't come through with wage increases that are large enough, then 70 percent of the Japanese workforce might not feel too good about the wage increase they got, and don't feel good enough to begin to spend again in the Japanese economy.
Nissan and Honda have had some financial challenges recently and tried to find a way to merge but the negotiations feel through and they now are still struggling so the reason why their proposed wage increases are much lower that the Toyota wage proposal.
And yes, many Japanese companies, that could do it, increased wages not only to keep their current employees happy and not quitting and moving to another company that is offering higher wages but to try and attract talent from other companies that maybe are not offering good wage increases.
But, again, as many companies that can give good wage increases there might be just as many are unable to increase wages or just a small wage increase, which put them in jeopardy of losing current employees and or attracting new employees.
It has been suggested that many large Japanese companies were for years, ever since the 2008 financial crisis, were sitting on large sums of cash and not using it to increase wages for their employees citing fear of another financial crisis in the future.
But except for the pandemic the next financial crisis never came but the Japanese government and the Bank of Japan has been, for lack of a better term, twisting the arms, of the large companies to finally start using their large sums of money to increase the wages of their employees as way to get the economy moving again and get consumers spending back where it should be.
This, again, could be the beginning of a major paradigm shift in the Japanese economy not seen for the last 30 years or so, and if all of these companies do come through it could be a major change in Japanese consumer spending which is never where it should be like the EU or the US.
The challenge of course is the small and midsize companies, which again make of 70 percent of the Japanese workforce. While the large companies might make up 30 percent of the workforce, that alone is not going to be enough to help the Japanese economy grow again and most likely it could be stuck in a semi-stagnation mode as usual.
Yes, the major firms in Japan, seem to be sitting on record profits and are finally beginning to think of their employees and not just their shareholders for once.
But again, the large companies in Japan only make up about 30 percent of the Japanese workforce which means about 70 percent of the workforce works for small and midsize companies, and if they are unable to come through with some significant wage increases the Japanese economy is going to be an economy of haves and have nots and Japanese household spending and consumer spending is going to be stunted again or constrained again as 70 percent of the Japanese households are not going to feel good enough about their wages increases to get out and spend in the Japanese economy.
Have a nice day!
