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Japan Business Federation, labor organization chiefs see need for wage hikes

Officials of business lobby Keidanren and labor organization Rengo meet in Tokyo on Jan. 27, 2021. (Kyodo)

TOKYO (Kyodo) -- The leaders of Japan's largest business lobby Keidanren and labor organization Rengo on Wednesday shared the importance of pay hikes as annual spring wage negotiations shifted into full gear amid the coronavirus pandemic.

    This year's "shunto" negotiations between management and labor unions are expected to be tough as the pandemic has depressed economic activity and hurt corporate earnings to varying degrees. Job security and workstyle reforms are also likely to be key items on the talk's agenda.

    "Even before the government requested wage hikes, I had a sense of crisis over Japan's relatively low wage levels within the OECD," Hiroaki Nakanishi, chairman of the Japan Business Federation, said, referring to the Organization for Economic Cooperation and Development, the club of 37 mostly wealthy nations.

    "This is an extremely important issue in the spring negotiations," said Nakanishi, who joined the meeting remotely with Rikio Kozu, president of the Japanese Trade Union Confederation.

    "Labor unions and management, as well as the government, have been jointly creating momentum for wage hikes since 2014, but it has not been spread across the country. It's critical that society as a whole shares the view" that wage growth is important, Kozu said.

    Since 2014, many companies in Japan have responded to calls by the government for wage hikes to beat deflation during the previous administration led by Shinzo Abe, who stepped down as prime minister last year.

    The pace of pay increases, however, is widely expected to slow during this year's negotiations, the first since Prime Minister Yoshihide Suga took office, who also wants to keep up the momentum at a time when his handling of the coronavirus crisis has come under criticism.

    Wednesday's meeting between Keidanren and Rengo officials came a day after a management-labor forum effectively kicked off the negotiations.

    Despite the shared need for wage growth, Keidanren and Rengo have different stances heading into the shunto negotiations.

    In its guidelines for corporate executives, Keidanren says it is "unrealistic" to aim for base pay increases across the board and that companies should be given more leeway in making decisions by reflecting the reality of each company.

    Companies with robust earnings should consider raising base pay, while struggling firms need to focus on keeping jobs, according to the business lobby. Rengo is calling for a pay-scale hike of around 2 percent.

    The services industry, which includes restaurants and hotels, is bearing the brunt of the pandemic as many people spend more time at home to reduce infection risk. Manufacturers have also been affected by the outbreak, and labor unions at some Japanese automakers are not planning to demand a pay-scale increase.

    Rengo is also seeking to narrow the gap in pay between regular and nonregular workers. As part of broad labor reforms, the government has set a goal of ensuring equal pay for equal work.

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