Japan’s largest business lobby sees blanket wage hikes as “unrealistic”

The priority should be to protect jobs rather than a uniform pay hike, it said as it unveiled guidelines to the upcoming wage talks.
By: | January 21, 2021

Japan’s largest business lobby, Keidanren, views a blanket wage hike across the country as “unrealistic”, it said Tuesday as it braced for salary negotiations with labour unions.

As the business lobby unveiled a guide to the upcoming wage talks slated to be wrapped up in mid-March, it stressed that the priority should be to protect jobs, rather than wage hikes, against a backdrop of the economic uncertainty and health crisis. 

The country’s largest labour organisation, the Japanese Trade Union Confederation, otherwise known as Rengo, has called for a uniform base wage hike around 2%.

Until last year, major businesses in Japan had raised wages more than 2% each spring for six consecutive years as the government pressured firms to increase wages to beat inflation and stagnation rates.

According to the guidelines issued, a base pay hike should be an option for companies benefiting from increased earnings. 

The business lobby, which has large companies as members, questioned Rengo’s target of a 2% pay hike, adding that it will be tough to get the backing of labour unions and management.

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In recent years, Japanese companies have been taking a varied approach to remuneration, shifting away from uniform wage increases and steering instead toward merit-based pay rather than seniority-based wages to lure younger, skilled workers.