On January 23, a labour-management meeting on the theme of the “Spring Labour Struggle” was held between RENGO (Japanese Trade Union Confederation) and Keidanren (Japan Business Federation), effectively launching negotiations on wage increases for 2023.

At the beginning of the meeting, Keidanren Chairman Tokura stated that “Although the Japanese economy is on a recovery path, price hikes, particularly in energy, raw materials, and food, are having a significant impact on people’s lives and business activities. For the economy to grow sustainably, it is necessary to realize a virtuous circle between wages and prices.
I think we are mostly in agreement with RENGO in recognizing this problem. We would like to confirm and communicate that Keidanren and RENGO are not in a conflicting relationship, but rather a “future co-creation” labour-management relationship in which we work together to create the future in order to resolve Japan’s social issues.”

RENGO President Yoshino stated that “Since last year, many people have been suffering through the COVID-19 pandemic and high prices. This spring’s initiatives should not be limited to extending the discussions so far, but should rather be a turning point where labour and management join forces to reshape and change the future of Japan. The means to achieve this is nothing other than the restructuring of a virtuous circle in the economy based on higher wages, and the business community has shown it shares this same awareness. From now on, we hope to realize continuous wage increases throughout Japan, not only for large enterprises but also for small- and medium-sized enterprises (SMEs) as well as part-time and contract workers, through sincere negotiations between labour and management and by ensuring that the results of these negotiations spread throughout society.”

According to the RENGO’s Policy for the Spring Struggle 2023, it has set a target of raising wages by 5%, including regular raises, from the perspective of encouraging each industry to strengthen its efforts to increase the level of basic wages and correct wage gaps and to sustain and improve the lives of all workers.

Ultimately, Abenomics, the economic policy initiated by the Abe administration 10 years ago, has hardly changed the course of the Japanese economy, which has been stagnating since the collapse of the bubble economy in the early 1990s, also known as Japan’s lost 30 years. Wages are a major factor behind this stagnation. Japan is the world’s third-largest economy, but its average wages are rather below average, ranking 22nd out of 35 OECD countries, behind South Korea.
At the meeting with RENGO, Keidanren President Tokura stressed the need to shift the current cost-push type of inflation to a demand-pull type and realize a virtuous cycle of wages and prices in which wages and prices rise appropriately, in order for Japan’s economy to achieve sustainable growth. He then positioned the 2023 Spring labour-management negotiations as a critical moment and a great opportunity to transform corporate action by aiming to overcome deflation and structurally raise wages by promoting investment in people.

This shift in attitude by Keidanren, which for many years had insisted that the priority should be securing jobs and that wage increases should be within the scope of productivity gains, is a groundbreaking development.

The question is how deeply these ideas of top business leaders will penetrate into SMEs, which account for 99% of Japanese companies.

On January 23, in his policy speech, Prime Minister Kishida stated that “wage increases” were an important policy issue, as they were last year. However, what is different from last year is that the emphasis is now on “creating an economic environment in which wages can rise,” unlike a year ago when the government tried to get directly involved in raising wages through changes to the tax system and appeals to companies. The Kishida administration describes this as a policy aimed at “structural wage increases.” This is an important policy shift in a desirable direction.

The Kishida administration should urgently promote the creation of an environment in which SMEs, which account for 99% of Japanese companies, can raise their wages appropriately.
If enough SMEs are able to raise wages to levels no lower than large enterprises, we can expect that not only workers, but also industries, businesses, and the economy will be greatly revitalized.

We hope that the government, labour, and management will take active measures to ensure that this year’s Spring Labour struggle will trigger this crucial structural change.