Pandemic dulls outlook for pay hikes at Japan’s annual wage talks

Japan’s Business Federation says companies should have more financial leeway and pay hikes are unrealistic amid the economic uncertainty.
By: | January 29, 2021

Japan’s annual wage talks has kickstarted Tuesday, with corporations and labour unions negotiating wages amid expectations that the pace of pay hikes will slow due to the impact of COVID-19. 

Japan’s Business Federation, otherwise known as Keidanren, has stressed the need for companies to have more financial leeway, asserting that aiming for pay hikes across the board is “unrealistic” as businesses reel from the economic impact of the pandemic. 

But the country’s largest labour organisation, the Japanese Trade Union Confederation, is set to demand a pay increase of around 2% during forthcoming negotiations.

“We are stressing the need to make decisions on wages based on the reality of each company, not across the board,” said Hiroaki Nakanishi, chairman of Keidanren at the opening of the forum, according to Japan Times. 

“I hope that management and labour unions will thoroughly discuss not only what to do about pay and benefits but also how to chart a path for future growth at each company,” he added. 

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

The forum is held online this year and attended virtually by corporate managers from major companies and labour union officials. 

Last year, major businesses raised monthly wages by an average of  2.12% after negotiations with respective labour unions, recording a decline from a 2.43% average pay hike in 2019.