Japan’s top labor group shoots for 5% wage hike, biggest in 28 years

1 comment

1. >*Worker compensation has only grown 4% over a decade while corporate retained earnings swelled 80%.*
   >
   >YUI NAKAMURA, Nikkei staff writer October 21, 2022 05:30 JST
   >
   >TOKYO — Japan’s largest labor organization will seek the biggest pay raise for union members in nearly three decades next year, the group said Thursday, as the country feels bite of inflation.
   >
   >The Japanese Trade Union Confederation, known as Rengo, seeks an increase of about 5%, which represents a rise of about 3% in base pay along with a seniority-linked bump of roughly 2%. Rengo’s unions represent about 7 million members.
   >
   >Rengo President Tomoko Yoshino, who took the position a year ago, pointed to rising consumer prices.
   >
   >”We should maintain the trend in wage increases since 2014, and taking inflation into account, we must go further to seek an overall leveling up,” Yoshino told reporters.
   >
   >From 2016 to this year, Rengo requested wage increases of about 4% during annual negotiations known as shunto, traditionally held in the spring. It has not aimed for 5% since 1995, when it sought an increase of 5%-6%.
   >
   >During deep slumps in corporate earnings, such as those that followed the global financial crisis in 2008 and the 2011 tsunami in northern Japan, Rengo did not set specific numerical targets.
   >
   >Business leaders have expressed some support for wage increases to absorb the economic impact of higher consumer prices.
   >
   >”Given the importance of inflation, it’s only natural to discuss wages,” Masakazu Tokura, chairman of the Japan Business Federation, the country’s biggest business lobby known as Keidanren, told reporters on Oct. 6. Tokura is also chairman of Sumitomo Chemical.
   >
   >But not all companies are in the same position. The weak yen is jacking up import prices, squeezing earnings at companies that sell mainly in the domestic market.
   >
   >”A 5% average [wage increase] would be quite difficult,” said Kengo Sakurada, chairman of the Japan Association of Corporate Executives. Sakurada also serves as chairman and CEO of the insurer Sompo Holdings.
   >
   >Toyota Motor, Japan’s most valuable listed company, has not disclosed any increases in base pay since 2018.
   >
   >Corporate earnings show some breathing room. Japanese companies realized a pretax profit margin of 5.8% in the last fiscal year, a new all-time high, Finance Ministry data shows. The Bank of Japan’s Tankan business survey forecasts an overall pretax profit rise this fiscal year.
   >
   >Retained earnings at Japanese corporations reached 516 trillion yen ($3.4 trillion) in fiscal 2021, topping 500 trillion yen for the first time and standing 80% higher than a decade earlier. Cash and cash-equivalents grew by 70% over the same period to 281 trillion yen.
   >
   >Yet labor’s share of profits has trended downward. Employee compensation and bonuses grew by only 4% over 10 years.
   >
   >Prime Minister Fumio Kishida has called for a broader effort to transform Japan’s labor market through programs like reskilling and aid for changing careers.