Employers plan tough wage stand

JPN, Asahi Shimbun, [11 January 1996]

Japan's most powerful employers organization plans to take a hard-nosed approach at this spring's talks with labor, maintaining that a wage increase is out of the question, Asahi Shimbun has learned.

It will be the fourth straight year that Nikkeiren, the Japan Federation of Employers' Associations, has taken a no-wage-increase stand—although workers did get increases the previous three years.

The average rises have been declining, however—from 5% in 1992, to 3.9% in 1993, to 3.1% in 1994 to 2.83% in 1995.

Although labor is expected to fight Nikkeiren, the employers organization's stand indicates that any wage increase this year may also be relatively small. Talks between the employers and the unions—known as the spring offensive—are expected to begin soon, and will likely come to a head about March 21 or 22.

In pushing for a wage increase, unions are likely to point out that corporate profits are picking up, that the yen has stopped appreciating against the dollar—which should help exports—and that the mining industry in particular is bouncing back. The Japanese Trade Union Confederation will decide on a spring offensive strategy Friday.

Labor will see more ominous signs in the report that Nikkeiren is issuing on the employment picture Friday than its stand on wage increases.

Fretting about Japan's competitiveness—a reflection largely of the fact that the country's wages are already the world's highest—the employers federation will call for big changes in the traditional employment structure.

For example, the report will advocate a review of the system of giving pay increases on the basis of seniority. That suggests that Nikkeiren may be preparing to advocate merit pay—a major change in Japanese employment.

Similarly, the report will contend that the size of bonuses workers receive should be based on merit and not seniority.

The report, which will be made public at a federation extraordinary general meeting Friday, will also call for work sharing—in which employers hire more people for shorter working periods at lower wages—to help ease joblessness.

Nikkeiren also will take a tough stand on reduction of employee hours. Unions have been demanding reductions but the employers organization will point out that work hours in Japan have been shortened to the same level as in the United States and England.

The report follows a study that Nikkeiren issued in May, titled Business Management in New-Age Japan, that proposed a review of the seniority-based pay system and lifetime employment.

With unemployment remaining a big problem—it was alltime high of 3.4% in November—employers must continue to rein in wage costs and even reconsider the conventional employment system, observers say.