Japan’s labour union pushes for pay hike in 2024

A 5% salary hike should be a bare minimum and better-performing firms should pay their employees more, said the country’s largest labour union.
By: | October 23, 2023
Topics: Compensation and Benefits | Japan | News

Japan’s largest labour union, the Japanese Trade Union Confederation (Rengo), has announced its decision to demand a pay hike of at least 5% in the upcoming annual wage negotiations slated for the spring of 2024. This move reflects the union’s efforts to address the ongoing issue of persistent inflation, which has eroded the purchasing power of employees’ wages.

In its basic policy for the 2024 annual wage negotiations between enterprise unions and employers, Rengo has set a target of 5% or more overall pay increase, including a base-pay rise of 3% or more. This represents a strong stance compared to the union’s demand for an “around 5%” pay hike in the 2023 negotiations.

Tomoko Yoshino, Head of Rengo, emphasised that the 5% target is the “minimum line”, encouraging better-performing organisations to aim higher. However, she acknowledged that smaller organisations may face difficulties in demanding larger pay raises due to rising raw material costs and economic challenges.

Ken Kobayashi, Chairman of the Japan Chamber of Commerce and Industry, expressed concerns about Rengo’s request, stating that it may be difficult for small and medium-sized organisations to meet such demands.

In addition to the overall pay hike, Rengo is also seeking a minimum hourly wage of 1,200 yen (US$8.01) or higher, a 50 yen (US$0.33) increase from the 2023 negotiations. This move aims to narrow the wage disparity between regular and non-regular employees.

READ MORE: Wage hikes will be sustainable for businesses: Japanese PM

The union’s demands come amid rising consumer prices in Japan, which have outpaced wage increases, putting a strain on employees’ finances. Core consumer prices in Japan rose 3.1% in August from a year earlier, marking the 24th consecutive month of increases. Meanwhile, real wages have fallen for 17 consecutive months.

The culmination of wage negotiations is expected in March 2024, when major organisations will decide their responses to their labour unions’ demands, reported Japan Today.