Photo/Illutration A board at the Japan Council of Metalworkers’ Unions at Tokyo's Chuo Ward shows offers made by employers during the “shunto” spring wage negotiations on March 13. (Hikaru Uchida)

For the first time in more than three decades, regular employees in Japan will see a hike in their paychecks exceeding 5 percent, according to this year's "shunto" spring wage negotiations.

Labor unions have announced their final tally for the negotiations, showing an average pay increase rate of 5.1 percent for regular employees.

This marks the first time in 33 years that the average wage increase has reached the 5 percent range, driven by a combination of rising prices and labor shortages.

In an unprecedented move, labor unions, management and the government all called for wage increases this year.

The focus now shifts to whether real wages, after adjusting for inflation, will turn positive.

The final tally was compiled on July 3 by Rengo (Japanese Trade Union Confederation), the nation’s largest labor union umbrella organization, based on responses from 5,284 unions by July 1.

The wage increase rate for 3,816 unions with fewer than 300 members was 4.45 percent, while that for 1,468 unions with at least 300 members was 5.19 percent.

The figure for non-regular workers, such as part-time and contract workers, was 5.74 percent on an hourly basis.

To help workers cope with rising prices, it is crucial to uniformly raise base pay across the board, rather than relying on regular pay hikes based on age and length of service.

Among 3,639 unions reporting specific base pay increases, the average hike was 3.56 percent, almost the same as the 3.5 percent increase in the Consumer Price Index for fiscal 2023.

However, Rengo's tally only covers companies with labor unions, excluding many of the small and midsize enterprises, which account for 99 percent of domestic businesses where roughly 70 percent of the nation’s workforce is employed.

Real wages per worker continued to decline for 25 consecutive months until April, the longest such streak on record, according to a labor ministry survey that covered all establishments with at least five employees.

The real impact of the shunto negotiations will begin to be felt from summer onward.

The key question now is whether the positive ripple effect on smaller businesses will translate into real wage increases for the broader labor population.

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