Japan’s top union amplifies push for strong wage growth
JAPAN’S corporations need to boost wages enough in the coming fiscal year that the increases exceed the previous period’s gains for a second year, the leader of the nation’s biggest trade union federation said.
“It is very important that we achieve wage increases for the second year in a row and at a level even higher than the previous year,” Tomoko Yoshino, chief of Rengo, said on Friday (Jan 5) at a new year’s press conference. “This is a critical moment.”
The remark came against a backdrop of heightened interest in this year’s spring wage talks, which are crucial to the Bank of Japan’s quest of achieving a virtuous wage-inflation cycle. Wage gains feeding into demand-led price gains are a condition for any move to normalise monetary policy.
Governor Kazuo Ueda stressed in a series of New Year’s events that he hopes wages and inflation will rise in a balanced manner in 2024.
A number of firms have signalled their intention to conduct ambitious wage hikes for some segments of their staff. Nomura Holdings announced a 16 per cent pay increase for younger employees in its brokerage subsidiary, while Tokyo Electron is reportedly set to raise its starting salary by an average of about 40 per cent.
Supermarket and convenience store operator Aeon plans to lift hourly wages for 400,000 part-time workers by 7 per cent by summer and conduct wage increases for full-time staff that exceed the increases of last year, according to the Nikkei.
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“I’d like to hope that Aeon’s actions will spill over in a positive way across the sector,” Yoshino said.
Ueda said after last month’s policy board meeting he’s seen positive comments pertaining to the outlook for wages, adding that he still needs to see more data before making any decisions. The New Year’s Day earthquake convinced the minority of economists predicting a rate hike in January to push back their timelines to match the mainstream view, which sees the bank’s first rate hike since 2007 coming in April.
Prime Minister Fumio Kishida’s Cabinet is also focused on improving household finances, as the combination of rising costs of living and a political funding scandal have pushed its disapproval rating to the highest since 1947, according to one poll.
The government plans an income tax cut in June and fiscal incentives for companies that administer large wage increases. The draft budget for the fiscal year from April includes a 1 trillion yen (S$9.17 billion) fund to spur wage rises and alleviate the impact of inflation.
The combination of wage gains and tax cuts will boost per capita income by an estimated 3.8 per cent next fiscal year, the Cabinet Office said in December. That would top the government’s 2.5 per cent inflation forecast. BLOOMBERG
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