Photo/Illutration Tomoko Yoshino, chair of Rengo, speaks to reporters in Tokyo on Oct. 20. (Jumpei Miura)

Japan’s largest labor organization on Oct. 20 agreed to seek a 5-percent pay-scale raise in next spring’s “shunto” wage negotiations, its highest target in more than 25 years. 

Rengo (Japanese Trade Union Confederation) said it took into account the recent hike in consumer prices that shrank real wages. 

The latest pay-scale increase target is the highest since 1995, when Rengo sought a 5-to-6 percent wage hike.

But the actual rate of pay-scale raise in recent years has hovered at around 2 percent.

It is unclear if management will meet Rengo’s demand. 

In the spring shunto from 2016 to 2022, Rengo’s pay-scale raise goals hovered in the 4-percent range.

That was based on a 2 percent annual wage hike and the other 2 percent that was an across-the-board pay increase, called “base-up” in Japan. 

But in next year’s shunto, Rengo will raise the goal of an across-the-board pay-scale increase to 3 percent or so.

Adding a 2 percent annual wage hike brings the total to around 5 percent. 

Tomoko Yoshino, chair of Rengo, said at a news conference that the latest demand is in response to the recent price hikes that burden people’s daily lives.

The consumer price index in August, which excludes volatile fresh food, increased 2.8 percent from the same month a year ago.

Rengo’s goal reflects such a price escalation.

The actual rate of pay-scale raise in 1989, when Rengo was established, hovered between 5 percent and 5.9 percent.

But with the bursting of the bubble economy, the pay-scale raises dropped. They have remained at around 2 percent in recent years.

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In addition, the rate of workers joining a labor union has dropped to about 17 percent. Therefore, it is unclear if Rengo’s goal will be achievable and if so, to what extent the workforce will benefit. 

Hisashi Yamada, vice chair of the Japan Research Institute, said Rengo’s high shunto goal was expected and fully understandable, in order “to cover the decline in living standards due to price increases.”

Prime Minister Fumio Kishida on Oct. 4 said he encourages individual companies to “aim for pay raises to cover the price hikes and have a discussion between labor and management, depending on each company’s actual situation.”

Yamada said management executives of major companies have shared the feeling that, “We cannot continue doing the same as before.”

Yamada said major companies will likely raise wages on a high level.

Masakazu Tokura, head of Keidanren (Japan Business Federation), said of the prospect of pay hikes in next spring’s shunto, “We will keep ordinary citizens in mind while considering the effect of the price increases.”

Tokura said at a news conference on Oct. 18 that the decision on wage increases is up to each company.

But he said he will urge companies to “be strongly aware of prices.”

Tokura, who places importance on the “formation of a vibrant middle class,” said, “It is necessary to recognize anew the role and function of across-the-board pay-scale increases.”

(This article was written by Jumpei Miura and Hideki Aota.)

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