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Japan's top business lobby encourages diverse ways to raise pay

Yasumi Kudo, vice chairman of the Japan Business Federation, speaks to reporters in Tokyo, on Jan. 22, 2019. (Kyodo)

TOKYO (Kyodo) -- Japan's most powerful business lobby on Tuesday called on member companies to consider improving labor conditions "comprehensively" ahead of the annual management-labor wage talks as more companies face a labor crunch.

The Japan Business Federation has in recent years focused on raising monthly base pay in the annual wages negotiations in response to Prime Minister Shinzo Abe's requests, but the lobby this time sees such a raise as one option among many to enhance work conditions including an increase in benefits and bonuses.

"An increase in monthly base pay is important, but companies' measures to help employees with childrearing or caring responsibilities and enhancing their motivation and productivity are crucial for growth amid the severe shortage of labor," Yasumi Kudo, vice chair of the lobby known as Keidanren, told a press conference.

With its population rapidly aging and birth rate remaining low, Japan faces a deepening labor shortage, prompting the government to hastily craft a new law to bring in more foreign workers for such sectors as construction and nursing care from April.

The latest negotiation policy laid out in the report by Keidanren's Committee on Management and Labor Policy serves as a guideline for each member firm's spring wage talks for the business year starting April.

Keidanren has accepted Abe's requests to raise wages to help beat Japan's chronic deflation since 2014.

In last year's wage negotiations, Keidanren called on its member companies to implement a 3 percent pay hike, saying the increase is a "social demand."

Abe again asked companies in December to hike wages as concerns linger about the adverse effects of the planned consumption tax hike from the current 8 percent to 10 percent in October. He did not give a numerical target.

For the upcoming wage talks, the Japanese Trade Union Confederation, the country's largest labor organization known as Rengo, has also decided not to focus only on base pay hikes but instead seek higher overall pay levels according to company size and employment styles.

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