Japan Union Head Calls for Government to Accelerate Wage Efforts
The chair of Japan’s metalworkers’ union urged the government to accelerate efforts to raise pay, while expressing concern over premature tightening steps from the central bank.
The chair of Japan’s metalworkers’ union urged the government to accelerate efforts to raise pay, while expressing concern over premature tightening steps from the central bank.
“We need to see improvements this year,” said Akihiro Kaneko, president of the Japan Council of Metalworkers’ Unions, speaking about the government’s measures to help smaller firms pass costs on to customers throughout the supply chain.
“We’ll never have any improvement if we delay this effort for the next five or ten years,” Kaneko said in an interview with Bloomberg Tuesday. JCM has two million members across five industries, including car, electronics and metal.
Kaneko’s comments come as Japan prepares for annual wage negotiations that culminate in the spring. For next year’s negotiations, the union has announced a record target of ¥12,000 or more in monthly pay hikes. This follows the ¥9,055 jump achieved this year, after the union initially demanded at least ¥10,000. Although that goal wasn’t met, this year’s result marked a significant jump from ¥5,391 in 2023 and ¥1,820 in 2022.
“We need to send a clear message that we are aiming higher,” the union leader said.
Echoing other trade union chiefs, Kaneko suggested that the wage gain gap between small and large companies must be addressed. Speaking as a representative for manufacturers across Japan’s supply chain, Kaneko said the government can implement legally binding measures to penalize companies that fail to promote fair trade practices. There are various approaches to boosting the effectiveness of these efforts, which would allow smaller firms to catch up in raising pay, Kaneko said.
In 2024, workers at large firms with at least 1,000 employees secured an average pay increase of over ¥12,000, while workers at smaller firms with fewer than 300 employees received an average pay rise of less than ¥8,000, according to JCM’s final tally in August. Nearly 70% of firms in JCM are such smaller companies.
The upcoming wage negotiations are closely watched by the Bank of Japan, as sustainable wage growth is a key component of the virtuous economic cycle, a precondition for the bank’s next rate hike.
With the BOJ’s decision approaching next week, Kaneko said there isn’t enough evidence to support an immediate rate hike. “I’m not convinced that raising interest rates now will ensure the continuation of the virtuous economic cycle,” he said. “It’s uncertain whether moving too quickly toward further rate hikes is the right approach.”
Kaneko added that personal consumption must be on track before the central bank can justify another rate hike. The central bank is scheduled to deliver its next policy decision on Dec. 19.
Separately, Kaneko suggested that companies need to allocate more of their record profits to workers and make profit distribution fairer. He cited finance ministry data showing that the share of profits going to shareholders and retained earnings has risen more than 80% in the decade through 2023, while the labor share of profit has only risen by around 10%.
“We could say that the Japanese economy is now dominated by foreigners,” the union chief said, citing the fact that a significant portion of the nation’s stock market is held by foreign investors. “I think we need policies that focus more on building national strength.”
The president also emphasized that Japan needs to raise wages to a level comparable to global standards, with the nation’s wage level remaining below the average for OECD countries. “If Japan isn’t meeting its labor needs domestically, we must create conditions that attract foreign talent to work with us,” he said.
Representing the interests of workers at Japan’s major exporters, from auto giant Toyota Motor Corp. to electronics maker Panasonic Holdings, Kaneko said the incoming US president’s policies will be crucial for their industries. On the campaign trail, president-elect Donald Trump repeatedly threatened tariffs of 60% on China and universal tariffs on the rest of the world.
In his first concrete action, Trump announced he will be introducing 25% tariffs on all goods from Mexico and Canada. Kaneko sees that move as a significant risk, especially for the automobile industry, given the importance of the North American market.
At the same time, Kaneko, who also chairs the automobile workers’ union, believes labor unions should not be swayed by the potential risks tied to US policies.
“If unions start lowering their demands because of fears related to Trump, they won’t be fulfilling their role,” he said.
This article was generated from an automated news agency feed without modifications to text.
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First Published:11 Dec 2024, 08:52 AM IST
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