25 Jan 2024

An exchange of views among government, labour, and management was held by the government, RENGO (Japanese Trade Union Confederation), Keidanren (Japan Business Federation), and JCCI ( Japan Chamber of Commerce and Industry) at the Prime Minister’s Office on 22 January.
The meeting followed up on the status of measures by small- and medium-sized enterprises (SMEs) to reflect labour costs in prices, following from the same meeting held in November of last year. Subsequently, the meeting also saw an exchange of opinions in the leadup to the 2024 Spring Labour Offensive.

The meeting was attended by Prime Minister Kishida, RENGO President Yoshino, Keidanren President Tokura, JCCI President Mori, and others.

RENGO President Yoshino made the following remarks.

“To achieve higher wage pass-through in response to wage increases for small- and medium-sized enterprises (SMEs), it is necessary to work towards a higher pass-through rate.
In addition to the government’s guidelines, the Anti-monopoly Act and the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors also need to be improved.
The ‘Guidelines on Price Negotiations for Appropriate Shifting of Labour Costs,’ released last November, are a major step forward. Moving forward, it will be essential to clarify the actual situation in each industry and sector so that more concrete price negotiations can proceed. Additionally, consideration should be given to utilizing public advertising as a means of raising public awareness on this matter.”

We are requesting that the government establish a platform for local government, labour, and management bodies to share awareness of challenges in various regions, create an environment enabling SMEs to secure resources for wage increases, and promote initiatives to revitalize the regions.

On 16 January, the Keidanren published the “Report of the Special Committee on Management-Labour Policy,” which outlines management’s basic stance in the spring labour–management negotiations. The report states that, as prices continue to rise, it is the social responsibility of Keidanren and companies to maintain and strengthen the momentum for wage increases and contribute to the realization of “structural wage increases.”
The report points out that it is essential for SMEs to work throughout the supply chain and for society as a whole to improve the environment and raise awareness in order to raise wages. It calls on member companies to actively engage in price negotiations for the appropriate transfer of labour costs based on government guidelines.

Based on the exchange of views between labour and management, Prime Minister Kishida stated the following on behalf of the government.

“Japan’s economy has an opportunity to shift from a cost-cutting oriented economy that has lasted for more than 30 years to a new economy based on a virtuous cycle of income increase and growth.
In order to make the most of this opportunity, it is essential for our current economy to achieve a structural wage increase that exceeds the rise in prices.

For this year’s spring labour-management negotiations, we ask that labour and management pay attention to price trends and raise wages to a higher level than last year. In order to firmly support such efforts by the private sector, the public sector will mobilize all its policies, including income tax reductions.

In order to raise the wages of workers in Japan as a whole, it is essential to increase wages at SMEs, where 70% of all employees work.
The key to this is to secure the resources for wage increases by passing on labour costs in prices. The government will implement measures to promote wage increases, such as expansion of wage increase tax incentives and labour-saving investment subsidies, and will make concerted efforts to address the issue of transferring labour costs.”

According to an announcement by RENGO, in the Spring Struggle 2023, the weighted average of wage increases, including those equivalent to fixed wage increases, for the 5,272 unions that responded using the average wage method was ¥10,560, or 3.58% (an increase of ¥4,556 from the same period last year, or 1.51 percentage points), of which the 3,823 small and medium-sized unions with less than 300 employees responded with ¥8,021, or 3.23% (up ¥3,178 or 1.27 points). The rate for small- and medium-sized unions with fewer than 300 employees was ¥8,021, or 3.23% (up ¥3,178, or 1.27 points), the highest level in 30 years.
Meanwhile, prices continue to rise. The 2023 average of the consumer price index “Composite excluding fresh food and energy,” which is used as an indicator of underlying price fluctuations, rose by 4.0%, the highest increase since 1981 (4.7%).

Indeed, the key to the recovery of Japan’s economy lies in the expansion of personal consumption, and this expansion is crucially dependent on the improvement of real incomes. Therefore, it is necessary to continue the wage increases obtained last year into this year and incorporate them structurally in order to enhance real incomes.

Improving the lives of workers as a whole is crucial, and wage increases for SME workers, who constitute 70% of Japan’s employed labour force, are just as important as for large enterprise workers, if not more so.
The trade union organization rate among SMEs is extremely low at less than 10%. This government, labour, and management meeting held great significance in terms of how to spread RENGO’s wage increases to SMEs as a whole.

RENGO has already set a target for this year’s wage increase of over 5% above last year’s, and the focus for the 2024 Spring Struggle will be on how much the wage increase rate for Japanese companies will exceed the actual results of 2023.
Management has already shown a certain understanding of the union’s intentions for this year, and with the support of the government, there are high expectations that RENGO will achieve solid results.