On January 20, 2014, Nippon Keidanren (Japan Business Federation) announced its 2014 Report
of the Committee on Management and Labour Policy, which sets guidelines for management to
follow in this year's spring labour offensive. The following is a summary of counterarguments
to the report by RENGO (Japanese Trade Union Confederation), which has already
decided to recommend wage demands of 3%-4% or more, including the regular wage hike.*
Common Understanding in Tripartite Meetings
From September to December 2013, "high-level meetings of the government, labour and management on the realization of a positive economic cycle" ere convened in which the government, labour, and management exchanged opinions on their respective roles toward a steady exit from deflation and the realization of a sustainable positive economic cycle. In the fifth meeting, held on December 20, 2013, they shared a common understanding for a four-pillar plan of action consisting of (1) efforts to raise wages, (2) efforts for small and medium-sized companies and small businesses, (3) efforts to upgrade the careers and improve the conditions of nonregular workers, and (4) efforts to improve productivity and develop human resources. From this perspective, in labour-management negotiations in the 2014 Spring Struggle for a Better Life (Shunto), it is necessary for labour and management not only to consider their own company's situation but also to fulfill their respective responsibilities in society.
Basic Wage Hike Essential for Sustainable Economic Growth
Regarding wage determination in 2014, the report only reiterates Nippon Keidanren's usual thinking (the "ability to pay" argument), stating that "wages and other working conditions should be thoroughly discussed by labour and management and determined in light of the business conditions of the company" and that "It is important also to have an attitude of reaching a conclusion within the overall working conditions of the company, without being unnecessarily swayed by trends in other companies."
On the contrary, RENGO argues that the expansion of household consumption is necessary to break away from deflation and that all unions should focus on the monthly wage (not the distribution of lump-sum payments and bonuses but basic monthly wage hikes) and realize wage raises that are consistent with economic growth.
Furthermore, regarding consumer price trends, the Nippon Keidanren report states that "rather than automatically reflecting them in wages, basic wage hike should be judged only through added value for funding wages generated by companies." RENGO cannot accept this attempt to separate consumer prices and wages. It goes without saying that as Japan enters an inflationary phase, the appropriate reflection of price increases in wages every year is essential for sustaining a positive economic cycle.
Wage Hike So Necessary in Small and Medium-Sized Companies As To Correct Gap
It is extremely regrettable that the Nippon Keidanren report does not once mention the problem of business transactions, which is a major cause of the income gap between large corporations and small and medium-sized companies. In a survey of business relations in small and medium-sized companies conducted by RENGO in May 2012, 55% of companies cited "price decreases or requests for price decreases" as an issue facing them. A substantial decrease of prices, which puts pressure on profits, connects directly to a lowering of wages and other working conditions for workers in small and medium-sized companies and cuts in human resource development spending, and structurally it consolidates and expands the wage gap between large and small enterprises.
In Japan 70% of employed persons work for small and medium-sized companies, so wage raises for workers in such enterprises are necessary in order to break away from deflation. From this perspective, it is essential for Nippon Keidanren to disapprove unjust price cuts and endeavor to realize fair business transactions.
Improving Conditions of Nonregular Workers and Realizing Fair and Equal Treatment
In the high-level meetings of the government, labour and management, it was recognized that it was extremely important to raise the wages of nonregular workers, improve their conditions, stabilize their jobs, and upgrade their careers. In its report, however, Nippon Keidanren states that supply and demand relations in the external labour market have a large impact on determining the wage levels of nonregular workers and that policy support for people who are forced to work on a nonregular basis because they cannot become regular employees should be provided by the government. Nippon Keidanren fails to reflect on its own role in increasing the number of low-income nonregular workers from the viewpoint of making cuts in total personnel expenses.
It is necessary to improve the system whereby nonregular workers can become regular employees, endeavor to realize fair and equal treatment befitting the jobs they do, secure reasonable wages and other conditions for nonregular workers, and ensure that they receive educational and training opportunities.
Response to Overseas Labour-Management Disputes in Conformity with International Rules
The prevention of overseas labour-management disputes is important. For this purpose, it is necessary for companies to substantiate daily labour-management communication at local sites overseas, without relying excessively on established practices within the company, and to have a proper understanding of rules stipulated by international organizations, such as the Guidelines for Multinational Enterprises of the Organization for Economic Cooperation and Development (OECD) and the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy of the International Labour Organization (ILO). In addition to these rules, Nippon Keidanren should also play a role in disseminating its own Charter of Corporate Behavior and the Action Guidelines for Overseas Direct Investment of the Japan Overseas Enterprises Association.
Past Related Articles
E-mail Magazine No. 146 (https://www.jilaf.or.jp/English-jilaf/mbn/2013/146.html)
E-mail Magazine No. 145 (https://www.jilaf.or.jp/English-jilaf/mbn/2013/145.html)
*The regular wage hike is a system by which wages rise in accordance with increases in the number of continuous years of employment and age. RENGO sets the average rate at about 2% of the monthly wage.