Japanese Labor Union Head Seeks Higher Wages to Offset Rising Costs
TOKYO (Reuters) – The head of Japan’s largest labor union group, Rengo, has called for annual pay increases to exceed 5.1% this year to offset the effects of rising prices, which have led to a decline in real wages.
Rengo President Tomoko Yoshino warned that the current rate of real wages is not sufficient to improve the living conditions of many Japanese workers. She emphasized that the union is seeking wage increases of 5% or more in this year’s wage negotiations, citing the impact of rising prices, particularly food costs, on everyday Japanese.
The outcome of the "shunto" labor negotiations is closely watched by the Bank of Japan, which uses the data to inform its monetary policy decisions. The BOJ has set sustained, broad-based wage hikes as a precondition for raising borrowing costs, and many firms have indicated they will offer solid pay hikes this year.
However, smaller firms have historically struggled to pass on rising costs, including personnel costs, to their customers, and Rengo has targeted hikes of at least 6% for these companies to narrow the income gap with workers at larger firms.
Some large companies, such as Uniqlo parent Fast Retailing and Nippon Life Insurance, have announced planned wage increases above 5%. The government has repeatedly pushed for companies to aggressively increase pay, citing concerns that Japan’s low wages and purchasing power have fallen behind those of other developed countries. Yoshino warned that if wages do not rise, talented young people will leave Japan to work abroad, citing the country’s low wages relative to other developed nations.