Vol.38-No.9 September 1,1999
The wage increase agreed to in the 1999 spring wage offensive was the lowest since the practice of having annual wage negotiations in the spring started in 1956. According to the Ministry of Labour, the average pay hike in 272 major companies in the private sector amounted to ¥7,005, a 2.21 percent increase — ¥1,318 or 0.45 percentage points lower than was recorded the previous year. The wage increase was below the previous low of 2.26 percent in 1998.
The present economic recession is said to be the worst in postwar Japan. This spring, management produced a series of counterproposals calling for wage cuts and the shedding of the labor force. Many observers felt that management was constantly on the offensive while the unions remained locked into defending their demands. According to Rengo (Japanese Trade Union Confederation), around 40 percent of all labor-management negotiations had not been concluded by the middle of May, an unusual delay. In Rengo's words, “The unions, particularly small and medium-sized unions, were in the most difficult situation they had experienced since the beginning of the spring wage offensive in the 1950s.”
One feature of this year's negotiations was that management even objected to having the regular annual wage increment. The message to the labor unions was that management aimed to cut as much as possible costs associated with scheduled wages. Behind this message was management's insistence that regular wage increases cannot be regarded as a vested right of workers. This reflects the desire of management to tie the wage system increasingly to job descriptions and to achievement. In taking that stance, they aim to get away from preconceived notions that each employee's wages must increase automatically each year with age and tenure.
Another feature of the negotiations was management's emphasis that company pension reserves and provisions for retirement allowances were insufficient. From March 2000, the international accounting standard in these matters is to be introduced gradually to Japan's enterprises. In particular, from March 2001 companies will be obliged to make public the situation concerning their reserves for pensions and retirement allowances. In recent times, the low interest rates and the ageing of the labor force has put pressure on company pension funds. Some plans have gone into deficit and companies have had to inject large amounts of additional funds into their pension programs. Negotiations in the automobile, electronic, and other industries forced management to counter union demands with the claim that the company was having a hard time making up shortages in the pension funds, and that wage increases would only make the situation worse.
Accordingly, one might conclude that the forces of globalization had been reflected in this year's spring wage negotiations through the alterations which will be made to accounting practices. The reconsideration of the accounting system in order to meet international standards has affected the wage talks. In this sense, it can be said that the spring wage talks are at a turning point as an institutionalized framework for wage determination which is unique to Japan.
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