Japan metalworkers' unions eye record base pay hikes in 2024

JAPAN’S labour council for metalworkers is considering demanding a monthly base pay rise of at least 3 per cent at wage talks with major firms such as car and electronics manufacturers next spring, unionists with knowledge of the matter said.

Labour shortages and high inflation are among the key factors behind what would be a record pay rise demand by the Japan Council of Metalworkers’ Unions (JCM) of around 9,000 yen (S$81.02) to 10,000 yen or more.

“We are internally discussing a pay hike demand based on those figures, although it’s not yet a done deal,” one union official said on condition of anonymity. “We are still at odds with each other over the extent of the pay demand.”

The latest move underscores the momentum growing for big wage hikes, with Japanese firms under pressure from Prime Minister Fumio Kishida’s demands for pay rises to outpace the inflation that is hurting households.

The JCM, which brings together labour unions in metal industries representing 2 million workers, will make its final decision on the level of base pay hikes on Dec 6, the official said.

Japan’s largest trade union confederation Rengo called for wage hikes of 5 per cent or more in 2024, while the JAM group of small manufacturers’ unions is seeking a 12,000 yen rise in monthly base pay.

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If the JCM settles its base pay hike demand at 9,000 yen-to-10,000 yen, that would be far more than the previous year’s hike of 6,000 yen. It would mark the highest increase on record since the current calculation method was established in 1998, when Japan was sliding into more than a decade of deflation.

The JCM’s previous record high demand was for a 7,000-yen pay hike in 1998. Wages have been frozen for decades since the country’s asset bubble burst, aggravating years of deflation.

Companies have in the past tried to avoid base pay hikes, which raise fixed labour costs and provide the basis for social security costs and retirement fees, as they are difficult to slash during economic downturns. REUTERS