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Wage hikes must be linked to economic recovery
Publication Date : 15-03-2013
It seems the public's expectations for Abenomics--the Abe Cabinet's economic policy aimed at escaping from deflation--have had a positive impact on this year's shunto spring wage negotiations.
Workers' wages had been sliding in Japan for years, helping to prolong deflation. It is essential that these wage increases be linked to growth in consumption and economic recovery.
On Wednesday, major automakers and electronics makers responded to labour unions' demands regarding yearly bonuses and regular pay raises based on seniority. Their decisions influence trends in the annual spring labour offensives.
Most major automakers, such as Toyota Motor Corp., said they will accept their unions' bonus demands in full. The average yearly bonus at such automakers has recovered to the level recorded in 2008, before the so-called Lehman shock. The automakers also acceded to the unions' demands on regular pay raises.
Compared to automakers, business performance has varied recently among major electronics makers. As a result, there were differences in the electronics makers' responses to their unions' demands, but they all accepted the demands on regular pay raises.
The outlook of labour-management negotiations has totally changed from last year, when some companies decided to forgo the regular pay raise and cut their employees' wages.
Management's policy shift
Initially, management took a hard-line stance before this year's shunto negotiations, stressing that certain companies may choose to postpone or forgo regular pay raises. Their policy shift is remarkable.
The underlying reason why the companies chose to accept the unions' demands is the rapid business recovery of export-oriented companies, such as automakers and electronics makers, boosted by the depreciation of the yen that took place after the launch of the Abe administration.
Requests by Prime Minister Shinzo Abe and some Cabinet ministers during negotiations that companies increase workers' wages were also effective.
Some company executives have acknowledged they took the government's requests into account. It is understandable for the labour unions to boast that they had a certain level of success in the negotiations.
Ahead the manufacturing industry, a number of convenience store chains, such as Lawson Inc., also raised their employees' wages. We want to praise the convenience store industry's decision to take the initiative in working to boost consumer spending.
However, although the public's hopes for Abenomics are running high, Japan has yet to witness substantial recovery in the real economy.
Few companies have promised to raise base pay, called "base-up" in Japanese, a uniform pay-scale increase that comes in addition to the regular pay raise. It is also unclear whether moves to raise wages will spread to small and midsize companies.
Recovery is yet to come
Depreciation of the yen will drive up the prices of fuel and imported raw materials. We have to be aware that certain industries, such as food services, will be buffeted by the headwind caused by such cost increases.
Will the government be able to connect companies' moves to increase their employees' wages, which the nation has been longing for, to steady economic recovery and make it the beginning of a virtuous economic cycle? What matters is the government's effort to reinforce cooperation with the Bank of Japan to achieve this goal.
The government plans to draw up by June its growth strategy, with policies such as practical implementation of regenerative medicine as its pillars. We hope the strategy will produce tangible results, such as strengthening the competitiveness of domestic companies and nurturing growing industries.
Such moves should be taken in tandem with bold monetary easing and flexible fiscal policy to accelerate the rejuvenation of the Japanese economy.