Japanese Unions Demand Highest Wage Increases in 20 Years

The annual Shunto kicked off in Japan on January 23^rd with a meeting between the heads of the Japan Business Federation and the Japanese Trade Union Confederation. While the employer and union bodies are in agreement that pay increases are needed, they are at odds over the appropriate methodologies to achieve the best outcome.

Consumer inflation in Japan has hit a 41 year high, with some workers experiencing low or no wage growth for decades.  Japan is one of the only G7 economies where wages have stayed flat for 30 years. 

The Japan Electronics Union and Toyota Union have both announced they will push for significant increases to the pay scales, with a particular focus on the starting salaries of employees. 

However, the Japanese Business Federation is guiding its members to consider all forms of pay increase, including special inflationary allowances and bonus increases – which provide greater flexibility for future downward inflationary moves.

Outlook for Employers: The financial industry is closely observing the moves of the Bank of Japan, with the upcoming Shunto playing a key role in the bank’s decision making on monetary policy.  There is a strong push from the Japanese Government for companies to play a role in resolving the increasing social inequalities in Japan resulting from inflationary pressure.   Many companies are being cautious about sharing their plans, as are the unions – a case of seeing who blinks first.