Vol.40-No.9 September 1, 2001
According to a survey by the Ministry of Health, Labour and Welfare, the wage increases agreed to during the 2001 spring wage offensive averaged ¥6,328 (an increase of 2.01%). This was more or less the same level that was achieved last year (when the average increase was 2.06%). Despite being the beginning of a new century, the negotiations were characterized by requests and answers that differed little from those of the preceding year.However, although the outcomes may have resembled those of last year, the implications which flow from this year's round of negotiations seem to be very different. Although some firms had achieved a consolidated operating surplus in March 2001 for the first time in four years, their managements did not wish to distribute the surplus in the form of wage increases. What, then, made them hold back from pay hikes?
Recently, the Japan Institute of Labour (JIL) surveyed private firms concerning this year's spring wage offensive. The survey revealed that many firms did not return all of the gains to their employees through higher wages. Rather, they were more likely to distribute such gains through lump sum payments.More than 80 percent of firms that increased their payments to employees did so primarily through or only through the payment of bonuses. In so doing the firms were behaving differently than they did in the previous year. The payment of summer bonuses, which had remained more or less the same for years, increased by ¥15,000 (1.96%) compared to the level of bonuses paid the previous year, according to a survey by Nikkeiren (Japan Federation of Employers' Associations).
With the spread of a performance-based wage system, wage increases are now more associated with each individual's ability and achievement. The payment of bonuses has thus come to replace or offset an approach which in the past had focused more on across-the-board wage increases or changes to the basic wage. When a firm's business performance improves, any surplus which is generated tends now to be paid to employees in the form of lump sum allowances.This year the unions argued strongly that the improved performance of many firms in this fiscal term could be attributable to the cooperation of employees in the firm's efforts to restructure in ways that resulted in labor shedding and restraints on wage increases during the past few years. And management in many firms agreed to some extent. The JIL survey asked about the reasons for the improvement in business. While the largest proportion (55.1%) indicated that it was because the performance of existing businesses had turned around, 44.2 percent answered that their improved performance was owing to their ability to get rid of unprofitable business sections, reduce labor costs, and to carry out various other restructuring measures. Restructuring was undoubtedly a factor contributing to the improved performance of many firms.
The major argument made by firms insisting on a zero increase in the basic wages rate was focused on the danger that Japanese firms were losing their competitive advantage vis-a-vis the firms in other Asian countries. It was argued that Asian competitors were catching up with them not only in terms of cost performance, but also in terms of production skills and quality control, which were once regarded as the hallmarks of Japan's manufacturing industries.Even the president of Toyota Motor Corporation, Mr. Fujio Cho, head of a corporation which showed ¥1 trillion in operating profits, expressed his concern about these matters at the labor-management negotiation table. Mr. Cho claimed that rigid insistence on wage increases will have a serious impact on the ability of Toyota Motors to regain its competitiveness. From this perspective, the pressures of international competitiveness seemed to have become a major parameter shaping this year's wage negotiations.
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