“By setting a 6% standard, we can be more proactive,” said Matsuura. — Bloomberg
TOKYO: One of Japan’s biggest unions plans to push for pay gains above 6% in a bid to kickstart a virtuous wage-price cycle that would enable the Bank of Japan (BoJ) to raise interest rates and strengthen the yen.
“The yen’s depreciation has gone too far, and I would like to see the BoJ take some policy steps to correct the situation,” said Akihiko Matsuura, president of UA Zensen, a labour union consisting of over 1.8 million members from sectors such as retail and restaurants. “I think we have to raise wages enough for the BoJ to be able to make a decision on that.”
Matsuura’s comments come as Japanese union leaders step up pressure on companies to boost pay during annual wage talks.
BoJ governor Kazuo Ueda is looking for signs that wage increases, including those at smaller firms, will spur demand-led price gains, allowing Japan to exit from the world’s last negative-rate regime.
Yen weakness puts pressure on profit margins at smaller companies that rely on imported goods or raw materials, leaving them less money to raise pay.
It also feeds into higher inflation that drives up the cost of living for Matsuura’s members.
A BoJ rate hike would likely support the yen by narrowing rate differentials with other countries including the United States.
UA Zensen, which represents workers mostly at small and medium-sized firms, is calling for a standard 6% increase in total wages.
This is a slight upgrade from last year’s stance, when the union aimed for gains of “around 6%”. That demand helped lower the hurdle for other unions to ask for 6% or more this year, Matsuura said.
“By setting a 6% standard, we can be more proactive,” said Matsuura. “Even if we demand 7%, we can say to labour and management that this is within the scope of industry policy.”
UA Zensen’s demands compare with the 3.85% average wage hike that big firms are planning to offer, according to a survey of 37 economists conducted Dec 25-Jan 9 by the Japan Centre for Economic Research.
Rengo, Japan’s largest union, is aiming for “5% or more” in this year’s wage talks. Initial results are due on March 15, just before the BoJ’s next policy meeting.
Rengo’s chief, Tomoko Yoshino, said yesterday that after early discussions she believes unions and employers are on the same page on the need for higher wages.
“I felt again that we are heading in the same direction as management in this year’s wage negotiation,” Yoshino said after meeting with Masakazu Tokura, head of business lobby Keidanren.
Tokura added that wage gains must include non-regular workers, with momentum spreading to smaller firms, and he’s fairly optimistic in the early stages of talks.
Matsuura said his group will help influence the whole process.
“We are the largest industrial labour union in Rengo, so of course, our wage increases will have a big impact on the Rengo results,” he said.
Prime Minister Fumio Kishida is also pushing for wage gains after increases last year failed to keep up with inflation, putting a burden on household budgets. The premier said it’s essential to raise wages at small and medium-sized companies.
“At the very least, we are aiming to turn real wages positive. So unless wage gains are in the upper 4% range or higher, we won’t be able to achieve that,” he said. — Bloomberg
