Labor and management start negotiations for spring 2005
On January 18, top officials at Rengo (the Japanese Trade Union Confederation), and Nippon Keidanren (Japan Business Federation) met to discuss future wage systems and other issues, marking the virtual start of this spring's labor-management negotiations.
Last year's negotiations began on a tough note, with management hinting at the possibility of basic wage cuts.
Let us first look back on last year's conditions, specifically, wage hikes and the employment of new graduates.
A fact-finding survey on wage hikes conducted by the Ministry of Health, Labour and Welfare found that 69.8% of the companies, up 7.1 percentage points over the previous year, raised their average wages per employee during 2004, while 3.4% of the companies, down 3.8 percentage points, lowered them. The amount of wage revision (weighted average by the number of full-time workers) was 3,751 yen, and the rate of revision was 1.3%. This was the first time in 8 years and 14 years, respectively, for the amount and the rate to surpass those of the previous year.
A year-end fact-finding survey, also conducted by the Ministry of Health, Labour and Welfare, showed that 131,000 individuals planning to graduate from high school in March 2004 received unofficial promises of employment. This was 8.6% more than the same period in the previous year. The rate of high school graduates receiving unofficial promises of employment was 67.7%, up 6.3 percentage points. The job-offer-to-application ratio was 1.15-fold, surpassing that of the same period of last year by 0.21 percentage points. The rate of college graduates receiving informal promises of employment was 74.3%, surpassing that in the same period of last year by a small margin.
Of course, both data provide material for concluding that the economy is headed upwards again. A more dramatic change in the backdrop to negotiations, however, is that listed companies have posted record ordinary profits for two years in a row.
Rengo President Kiyoshi Sasamori began the meeting by commenting that, although the number of companies expecting to show a recovery in their business was increasing, this had been made possible by sacrifices and contributions on the part of the workers. He remarked that the most important task was to consider ways to translate the gains made through the business recovery into improvements in employment, wages and labor conditions.
In response, Nippon Keidanren officials, while able to support wage hikes by individual companies whose business performance has recovered, stated that Japan was at a delicate stage, not knowing whether or not this economic upturn would last. They insisted that the system of annual pay increases for all employees should be reexamined, and added that there was little or no room for making across-the-board wage increases.
The fact is that a shift to wage systems based on employee performance, or those linked to business performance, has already made substantial headway in Japanese corporations, mostly large companies. Since last year, lump-sum payments have replaced basic wage increases as the focus for negotiations.
For the fourth straight year, Rengo has decided against presenting a unified demand amount. Like last year, it reportedly will emphasize the need for programs to ensure that annual wage increases are maintained, that the gap with SMEs is eliminated, and that pay levels are raised. In cases where the wage curve is difficult for unions to calculate, Rengo has set forth the policy of establishing "a benchmark value of 5,200 yen that corresponds to the amount that is ensured on the wage curve, plus 500 yen or more" or "5,700 yen or more."
By type of industry, eyes are now fixed, like last year, on the course of proposed demands as well as labor-management negotiations in the automotive and steel sectors, which are enjoying brisk business.
The Confederation of Japan Automobile Workers' Unions has continued to position, for the second straight year, the basis for their demands on the major premise of locking in the amount needed to maintain the wage curve, while, for basic wage increases, leaving it open to each union to make voluntary judgments, including whether or not to make such demands. One thing that should be noted is that, since favorable business results are beginning to spread to the autoparts department, which includes small- to medium-sized unions, the tone of demands for basic wage increases has become louder than last year.
The highest-ever maximum lump sum payment made in the past by Toyota was 2.37 million yen on average for union members (5 months' pay plus 550,000 yen). However, the union plans to demand 2.4 million yen this year, and the company is anticipated to respond with a high value once again.
As in years past, the unions will stake their raison d'etre on this spring's joint labor negotiations, to see if the gap can indeed be rectified, and ultimately, whether they can put the brakes on the decline in the ratio of organized labor to the total labor force.
US$=\103 (February 1, 2005)
