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Raising Wages Has Become a Form of Corporate Social Responsibility


The shunto spring labor wage negotiations this year will come as the people are suffering from soaring prices. Such circumstances for a shunto have not been seen in recent years. It is vital to make this opportunity a turning point to break a long-standing pattern of stagnant wage growth.

The Japan Business Federation (Keidanren) has released its Report of the Committee on Management and Labor Policy, which guides the management side’s policy for the shunto negotiations. In light of high prices, the report called on member companies to actively engage in wage increases as part of their corporate social responsibility.

In addition, the report called for a change of mindset “from the social point of view,” positioning this year’s shunto negotiations as “a critical moment to realize a shift to corporate actions aimed at structural wage increases.”

It can be said that the Keidanren report this time is totally different from its past reports, which laid out reasons for restraining wages, such as the uncertain outlook for the economy. It is noteworthy that Keidanren emphasized its determination for wage hikes in the latest report.

In November 2022, the consumer price index, excluding perishables, was up 3.7% from a year earlier, the highest rate in about 41 years. It is essential to raise wages at a greater rate than the rise in prices.

The Keidanren report urged member companies to positively consider a pay scale increase to raise the level of base pay for employees.

The Japanese Trade Union Confederation (Rengo), intends to seek a total pay hike of around 5% — a pay-scale increase of about 3% plus a one-time annual pay raise. Notably, the pay scale is also used to determine employees’ bonuses and retirement allowances, making it easier for them to feel the effects of higher wages. It is desirable to implement a pay-scale hike as much as possible.

Many exporting companies are performing well due to the weak yen. Companies’ internal reserves, the accumulation of their profits, exceeded ¥500 trillion at the end of March last year. So, they should have ample surplus capacity to raise wages.

Ahead of the shunto negotiations, the management at a number of major companies in the food, financial, real estate and other industries said they would raise wages. It is important to expand such a trend to all industries, to overcome high prices and create a virtuous cycle in the economy.

If the current situation continues, Japan could fall behind in the global competition for human resources. This is because prolonged deflation has brought Japan’s average wages to the lowest level among major advanced nations.

Fast Retailing Co., the operator of Uniqlo, said that it will raise the annual salaries of around 8,400 full-time workers in Japan by up to 40%.

Fast Retailing, as its overseas operations expand, has judged it necessary to bring its Japanese salary levels in line with those overseas to secure excellent human resources. The company said it will link the wage hike to the strengthening of its global competitiveness and growth potential. Other companies with operations around the world should use this case as a reference.

It is also vital to spread wage increases by major companies to small and midsize firms. Major companies should allow their subcontractors to implement appropriate price increases in their transactions so that they can secure the resources to raise the wages of their employees, too.

(From The Yomiuri Shimbun, Jan. 18, 2023)



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