Photo/Illutration Keidanren (Japan Business Federation) Chairman Masakazu Tokura speaks through a video message at an event sponsored by his organization held in Tokyo on Jan. 24. (Keiichi Kitagawa)

A rare meeting of the minds between labor and management regarding pay hikes has both sides agreeing at the start of the annual "shunto" spring wage negotiations that they are needed to boost the economy. 

However, the question is how big of an increase will be hammered out that will be agreeable to both sides. 

Tomoko Yoshino, chairwoman of Rengo (Japanese Trade Union Confederation), attended a forum sponsored by Keidanren (Japan Business Federation) held on Jan. 24 in Tokyo.

Touching upon the negotiations, she said, “This year’s shunto will be crucial in setting a secure path for a staged conversion to an economy and society in which there is a stable increase in the economy, wages and consumer prices.”

In a video message to the forum, Keidanren Chairman Masakazu Tokura, who was in China on a business trip, said, “Emphasis should be placed on consumer price trends and consideration and implementation of a hike in wages should be undertaken as much as possible while keeping in mind an increase in the base pay scale.”

Rengo has set a unified goal for its member unions of a pay hike of 5 percent or more for this year’s shunto. That is a more aggressive stance than last year when Rengo called for a pay hike of about 5 percent.

Member unions have indicated that they would be asking for record high pay hikes this year.

Both labor and management are on the same page about moving Japan out of its long deflationary state to create a society in which wages and consumer prices both increase.

The bursting of the asset-inflated bubble economy in the 1990s and the subsequent financial crisis placed the economy in a deflationary state.

According to statistics compiled by Rengo, wage hikes in the decade after 2000 were under 2 percent, even including increases in the base pay scale. There were some periods when base pay remained unchanged.

Last year saw the highest wage hike in 30 years as pay increased by 3.58 percent. But base pay only increased by 2.12 percent, which was lower than the 3-percent increase in the fiscal 2022 consumer price index excluding perishables.

That meant real wages continued to be below the previous year’s level.

Labor unions will submit their wage hike demands from February and major companies are expected to present their responses from mid-March.

(This article was written by Takaya Katada and Keiichi Kitagawa.)

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