The 1999 spring wage offensive climaxed on April 17 and 18. The negotiations between labor and management took place in the wake of two consecutive years of negative economic growth and insecurity concerning employment. It thus seems certain that the average pay hike in percentage terms will be a record low (an increase of around 2.1%).
Negotiations in the four major pace-setting industries automobile, electronics, shipbuilding and heavy machinery, and steel were dominated by proposals from the management side for cuts in regular pay raises, the remodeling of wage systems, adjustments to employment levels, a reconsideration of pension funds, and other such measures. Management took full advantage of the spring offensive to demand that unions share the critical situation with management, citing the need to reduce overall labor costs. The unions were unable to make effective counterarguments, and were eventually compelled to give in.
Although the unions' demands were rather moderate, having asked for a one percent basic wage raise of around ¥3,000, management refused to compromise and negotiations continued until the day before management was due to give its final answer.
In the auto industry, a key pace-setter, Toyota Motor Corporation, agreed to a ¥7,600 raise (including a ¥6,900 increase to the fixed annual increment), ¥1,300 below the figure for the previous year. Although the amount of annual bonus has been customarily fixed on the basis of the union's request, the actual amount this year was not set at the six months of basic wages which the union had requested; rather it was set at 5.9 months of basic salary. At Nissan Motor Corporation, which had registered poor business results over the previous year, ¥6,700 was the agreed increase in the fixed annual increment, with no increase occurring in the basic wage.
The 17 major electronics makers settled on a base wage increase of ¥500, a decrease of ¥1,000 from the previous year. The level of annual bonuses varied among the 17 companies, with none exceeding five months of the base wage. Following the settlement of negotiations in the metals industries, Nippon Telegraph and Telephone (NTT), electric power firms, and major private railway companies gave replies that were between ¥1,300 and ¥1,600 lower than the year before.
Consequently, this year's spring offensive (a negotiation system that started in 1956) seemed certain to result in a wage increase below the previously low record of 2.26 percent which was achieved in 1998. Subsequent wage negotiations in small and medium-sized companies saw a delay in agreements. Due to their lack of confidence about maintaining employment levels, an increasing number of firms put off their settlements until after the holidays at the beginning of May.
Nikkeiren (Japan Federation of Employers' Associations) has been advocating structural reform of the present wage negotiation system since around 1995. This is because many employers feel it is necessary for unions and management to be more aware of the changed situation in a highly competitive age and to reach a consensus with each other on employment, internal organization, personnel practices, etc. In line with this, Nikkeiren has come to regard the spring offensive as a round-table meeting and sees wage increases as one theme in the debate on structural reform. This year's wage negotiations seem to have been strongly influenced by this idea of having a spring offensive towards structural reform.
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