Annual wage negotiations climaxed on March 24. Labor was faced with tough negotiations with management amid the prolonged recession. The wage increase rate is bound to be less than the previous low of 3.6 percent registered in 1987.Vol.33-No.04 April 1,1994
Annual wage negotiations climaxed on March 24. Labor was faced with tough negotiations with management amid the prolonged recession. The wage increase rate is bound to be less than the previous low of 3.6 percent registered in 1987.
The current slump began in May 1991 and in April 1993 the nation's economy equaled the postwar record of 36 straight months of recession which followed the second oil-supply crunch. In February the government decided to implement a comprehensive economic stimulus package totaling 15 trillion yen, including 5.4 trillion yen in tax cuts. However, Japan and the United States failed to reach an agreement in trade talks held immediately after the announcement of the package. The two countries' failure to wrap up agreements under the bilateral framework of trade talks thus prompted the yen to soar in Tokyo.
Rengo (Japanese Trade Union Confederation), the national center of labor unions, decided to ask for a wage-hike demand of between 5 percent and 6 percent. Rengo claimed that expansion of consumption, which accounts for 60 percent of domestic demand, is indispensable for boosting the economy and thus stated that an adequate wage raise is needed in addition to tax reduction. Nikkeiren (Japan Federation of Employers Associations), the center for management labor strategy, stressed the "virtual difficulty of a wage increase. This was based upon the pinch felt by most firms facing lower corporate earnings for the fourth consecutive year. Nikkeiren maintained that priority placed on jobs and the lives of workers should be improved by lowering prices through deregulation.
In Japan, wages negotiations are generally held between labor and management from individual industries. Labor's clarion call for a "buoyant economy through wage hikes" has not been well accepted because negotiations depend to a large extent on trends in corporate business performance.
Fearing that traditional tactics will force labor to accept a small wage rise, leadership groped for new tactics for this year's wage struggle. Four pace-setting metal indusries (steel, shipbuilding and heavy machinery, automobiles and electrical machinery) suffered from the sharp appreciation of the yen. Accordingly, the collective bargaining led by unions of the metal industries amid the current situation will tend to set the trend for wage talks at lower levels. Labor therefore studied tactics such as receiving management offers in public-interest industries, such as major private railways, power companies and Nippon Telegraph and Telephone Corp (NTT), which are relatively immune to economic conditions. However, management refused to accept this approach and labor eventually adopted its traditional tactics as the management of these industries are not allowed to set rates at their own.
On March 24, management of four leading metal industries made their wage offers and on the following day, workers at the major private railways, in the power industry and NTT agreed to accept them. Thus, wage settlements were reached in a concentrated manner, as usual. The 1994 wage talks have climaxed and settlements will follow in other sectors, such as manufacturing, tertiary industry, and in small businesses.
Wages for employees at national enterprises such as postal services are also decided upon in labor-management negotiations, but are actually determined by Churoi, a third-party arbitration body, based upon private-sector wage-hike trends.
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