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Labor unions at major Japanese firms secure wide pay hikes

An employee of the Japan Council of Metalworkers' Unions writes down the results of labor-management wage negotiations at major firms, in Tokyo's Chuo Ward on March 14, 2018. (Mainichi)

Labor unions at major Japanese corporations reached an agreement with their management over pay-scale increases that turned out to be greater than the previous year's levels on March 14, in a major reversal from last year's dismal negotiation results where the hikes were smaller than the preceding year at many firms.

This year's wage negotiations, however, were locked up until just before the deadline at major automakers, whose pay-scale raises affect other companies' moves in the annual spring labor offensive. Furthermore, Toyota Motor Corp. took the unusual step of withholding the specific sum of its pay-scale increase.

"It was an extremely unusual and difficult situation," commented Akira Takakura, chairman of the Confederation of Japan Automobile Workers' Unions (JAW), at a press conference on March 14.

At 12 companies including major automakers, labor unions managed to secure pay-scale hikes wider than the previous year, but negotiations became heated over the companies' futures amid increasingly stiff competition over the development of self-driving cars and electric vehicles. Over half of those companies saw labor-management negotiations drag out until the very morning of the due date for responses.

Toyota's labor union demanded a 2.9 percent pay raise for regular workers, combining a pay-scale increase and a periodic pay raise, but the management only responded with an average wage increase for all union members, taking into consideration allowances to be introduced for fixed-term employees and other factors as well. The average pay raise of 3.3 percent a month, nonetheless, was well over the 3 percent hike requested by Prime Minister Shinzo Abe. At a press conference, Toyota's Senior Managing Officer Tatsuro Ueda proudly said, "Our desire to support the development of Japan's economy and manufacturing is far stronger than that of other companies."

While boasting that Toyota's pay-scale raise was greater than last year's levels, the auto giant stopped short of releasing the specific sum for its pay hike on the grounds that it wanted to "break down the customary practice" of its group companies using the parent firm's moves as a reference for deciding their own pay-scales. It was also the Toyota management's intention to avoid receiving excessive attention as the trendsetter in the annual labor offensive.

JAW Chairman Takakura lambasted Toyota's nondisclosure policy, saying, "It has left us with problems as the move prevented us from forging a joint struggle in our bid for synergy."

In the electronics industry, labor and management at 13 companies including Hitachi Ltd. and Panasonic Corp. agreed on a pay-scale increase of 1,500 yen, up 500 yen from last year. Even though the figure may, at first glance, appear to be a large increase, the companies only met labor unions' long overdue requests, as they had settled on half the sums demanded by the labor side in their wage negotiations between 2014 and 2016.

Increasingly severe global competition is also affecting the Japanese electronics industry. "We have managed to bring about pay-scale raises of 7,500 yen over the past four years," said Panasonic Representative Director Mototsugu Sato during wage negotiations with the firm's labor union.

In general, however, a pay-scale increase means a rise in fixed costs such as retirement packages, so management wants to curb pay-scale raises as much as possible. It therefore remains to be seen whether domestic businesses will continue with pay-scale hikes next year and beyond.

Hisashi Yamada, chief researcher at the Japan Research Institute Ltd., commented, "Many companies are not yet confident enough to make their pay raises sustainable. They still tend to take a defensive policy of racking up internal reserves to prepare for any potential crises."

While the latest wage hikes are expected to prop up an expansion of domestic consumption, it remains to be seen whether the trend will continue as demanded by labor unions.

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