In this year's shunto wage talks, which occurred in an economic slowdown and much lower corporate profits, labor felt compelled to take a defensive stance against management. Uncertain prospects for the economy made the situation even worse. Even companies that recorded an increase in ordinary profits over the preceding year recorded a decline in the size of the wage hike when compared with that of the previous year. According to a survey conducted by the Ministry of Labour on the outcome of 1998 spring wage negotiations, 288 major private companies (which were each capitalized with more than two billion yen and carried a workforce of 1,000 or more employees) reported an average wage hike of ¥8,323, representing a 2.66 percent increase. That amount was ¥604 and 0.24 of a percentage point below the increase won in 1997. The 2.66 percent increase was a record low, undercutting the previous low of 2.83 in 1995.
The prolonged sluggishness in personal spending that resulted from the rise in the consumption tax in April 1997 and the large-scale financial failures, such as the bankruptcy of Yamaichi Securities, contributed to the mood for this year's shunto. Moreover, the gross domestic product reported for 1997 dropped for the first time since 1975. Labor had customarily offset the rate of price increases in one year by a boost in the wage base the following year. Excluding the regular automatic pay hikes, the inflation rate was seen as determining the lowest increase rate. In this year's talks, unions aimed for a four-percent wage increase that would incorporate two percent for the regular annual pay raise plus two percent for the increase in commodity prices. However, they settled on a wage hike far below that level. This was the ninth time since the spring offensive began in 1956 that the unions had to accept a shunto result that was below that of the previous year.
The Confederation of Japan Automobile Workers'Unions was chosen as a pacesetter in this year's negotiations. The workers at Toyota Motor Corp. had the role of leading the wage talks. However, they agreed on a monthly wage raise down ¥500 from that gained the year before. Management took a hard stance in the negotiations because it felt uncertain about the company 's prospects owing to a decline in production despite expected profits of ¥650 billion. Toyota's pay hike from a year earlier was an indicator for other companies in the auto industry.
This year saw labor and management at the major steel makers adopt multiple-year agreements. Under the new agreements wage talks would be held once every two years. Management offered a ¥1,500 boost in the wage base for a 35-year-old standard worker for both 1998 and 1999. Major steel makers had held the increase in the wage base to within ¥1,000 for the past four years, but in this year's talks unions were able to obtain two successful hikes, over that amount, making the new system proposed by labor successful. However, labor and management in other industries have shied away from the longer-term approach.
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