Japan business lobby says blanket pay rises 'unrealistic' amid pandemic pain

[TOKYO] Japan's biggest business lobby shrugged off on Tuesday calls for wage hikes as it braced for key spring salary negotiations with labour unions, calling blanket pay rises "unrealistic" as companies are hit by fallout from the Covid-19 pandemic, officials said.

Keidanren, unveiling a guide to the upcoming wage talks which will be wrapped up in mid-March, stressed that the priority was job protection rather than wage hikes, given the current economic and health crisis.

The business lobby's cautious stance signalled tough negotiations with labour unions led by Rengo, which has called for uniform base pay hikes around 2 per cent, after last year when the management offered the lowest wage increases in seven years.

Rengo officials could not be immediately reached for comment.

Until last year, major firms had raised wages more than 2 per cent each spring for six straight years as the government pressured businesses to boost pay to defeat deflation and stagnation that has dogged Japan for two decades.

Bellwethers such as Toyota Motor Corp have set the tone of the annual spring labour talks, with others going along with the crowd.

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In recent years, however, Japanese firms have begun to take a more varied approach on remuneration, with more eschewing blanket pay hikes and shifting to merit-based wages rather than seniority-oriented pay in a bid to lure young, skilled workers.

Wage strategies have also been affected by structural changes in Japan's labour market, with about 40 per cent of workers being lower-paid part-time staff and contract workers - double the proportion seen in 1990, just before Japan's bubble burst.

The growing army of lower-paid workers tends to lead unions to prioritise job security and tackle the income gap between permanent employees and others rather than aggressive pay hikes.

REUTERS