Rengo represents some 7 million Japanese workers. The 5% wage hike consists of a 3% ‘across the board’ increase to base pay, plus a 2% annual wage increase. The union argues that the wage increases afforded to workers in the past two years have already been consumed through a higher-than-expected inflation rate in Japan. The consumer price index from August 2022 was 2.8% higher than the previous year.
While some business leaders are supportive of the increase, to help employees address the rising price of consumer goods, other companies impacted by the falling yen are less optimistic.
Outlook for Employers: The central Bank of Japan is not convinced that the current price increases are persistent, and therefore continues to implement a loose monetary policy. This will potentially lead to increased inflationary pressures, placing greater demand on employers to support the union wage negotiations in 2023.