FILE PHOTO: Worker cycles near a factory at the Keihin industrial zone in Kawasaki
A worker cycles near a factory at the Keihin industrial zone in Kawasaki. Photo: Reuters/Toru Hanai/File
politics

As inflation bites, Japan's PM finds unlikely ally in labor unions

16 Comments
By Tetsushi Kajimoto and Leika Kihara

As Japan faces its first major battle with inflation in decades, Prime Minister Fumio Kishida is extending a rare olive branch to labor unions, who he sees as crucial to his wider push to boost household wealth.

Wage stagnation has blighted Japan's workers for years as the country was mired in a deflationary mindset that stopped firms raising salaries, and as weakened unions shied away from demanding more pay.

As part of his "new capitalism" platform to widen wealth distribution, Kishida has urged firms to boost pay and give households spending power to tolerate higher prices.

He is also approaching unions for help in achieving what other countries would frown upon: a spiral of rising inflation triggering strong wage growth.

In January, Kishida became the first premier in almost a decade to attend a new year party held by Rengo, the main umbrella union, in a rare gesture to organized labor by the head of the pro-business Liberal Democratic Party.

At the event, he called for labour union help in achieving "a bold turnaround in the downtrend in wage levels seen in recent years" and "wage hikes befitting an era of new capitalism."

In June, he made a similarly rare visit to Toyota Motor Corp's factory in what some politicians saw as a bid to court union votes.

The attempt to close some of the distance between unions and government illustrates the depth of Japan's economic woes and has, at least for now, put Kishida on the same side as organized labor in calling for higher wages.

Japan's recent union history has been unspectacular.

Most unions are in-house bodies representing employees at their firms, rather than on an industry basis. As such, they tend to prioritize job security over pay.

Now, however, conditions for higher wages appear to be falling into place in ways never seen in deflation-prone Japan.

The job market is at its tightest in decades and inflation exceeded the central bank's 2% target for the first time in seven years, pressuring firms to raise wages.

Shedding its image as a counter-force to a pro-business government, labour unions, too, are warming to the administration as they seek ways to put their ideas into practice beyond relying on a weak, fragmented opposition.

Tomoko Yoshino, head of Rengo, attended a ruling party meeting in April as a token gesture of support toward its policy on work-style reform.

"It's true some of Kishida's proposals mesh with ours," such as steps to narrow income disparity, said Hiroya Nakai, an executive at Japanese Association of Metal, Machinery and Manufacturing Workers - a union for small manufacturers.

"At times it's necessary to make proposals to the ruling party," he said.

The relationship between Kishida and unions contrasts with that of many other countries, where governments see current demands for wage hikes as a risk that could trigger unwelcome inflation.

It also highlights Japan's unique situation where a tight job market does not necessarily lead to broad-based wage rises.

Japan's average wages have hardly risen since the early 1990s and were the lowest among G7 advanced nations last year, according to OECD data.

Japan's wage growth lags that of major peers.

There are signs of change as a rapidly aging society intensifies labour shortages. Firms agreed with unions to raise average wages by 2.07% this fiscal year, up from 1.78% last year to mark the biggest hike since 2015, Rengo estimates show.

With inflation rising above 2%, unions are gearing up to demand even higher pay next year.

"We must bear in mind that inflation is accelerating and pushing real wages into negative territory," said Akira Nidaira, an executive at Rengo. "The key is whether Japan can finally eradicate the public's deflationary mindset."

DEFLATION IS OVER

Many analysts, however, doubt unions have the teeth to demand wage hikes big enough to offset rising inflation, and see the changing nature of work undermine such efforts.

"Japan's job market is diversifying, raising questions about the relevance of labour unions," said Kotaro Tsuru, a professor at Keio University. "If they cling to their traditional focus on protecting permanent workers' jobs, their fate is sealed."

As Japan's labour market tightens, job security has become less attractive for younger workers who change employers more often than their older counterparts.

Tracking global trends, union membership has been declining longer term. It hit 16.9% in 2021, hovering near an all-time low and well below 30.5% in 1982.

"I don't think labor unions are playing their role. Wages aren't rising as much as I hoped," said a 25-year-old employee at a major Japanese manufacturer and in-house union member.

"Unions might prove useful some day but on a daily basis, they don't seem to be pro-active," said the employee, who spoke on condition of anonymity due to the sensitivity of the matter.

Also working against unions, almost 40% of employees are now non-regular workers and mostly unprotected by unions.

While some unions now allow non-regular workers to join, most still prioritize permanent workers.

"Labour unions haven't adapted themselves to the changing needs of the younger generation," said Hisashi Yamada, senior economist at Japan Research Institute.

"Accustomed to prolonged economic stagnation, they seem to have forgotten how to demand wage hikes," he said. "That needs to change as the era of deflation and dis-inflation is over."

© Thomson Reuters 2022.

©2022 GPlusMedia Inc.

16 Comments
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Wage stagnation has blighted Japan's workers for years as the country was mired in a deflationary mindset that stopped firms raising salaries, and as weakened unions shied away from demanding more pay.

Japanese unions are complicit class traitors whose leaders are in league with the LDP/Japan Inc. combine. Like in the US workers can be deceived to abandon their financial interests by nationalist and xenophobic fairy tales spun by oligarchs.

Contrast that to the gains by Korean and French unions by their disruptive struggles.

https://toyokeizai.net/articles/-/537393

As part of his "new capitalism" platform to widen wealth distribution, Kishida has urged firms to boost pay and give households spending power to tolerate higher prices.

New Capitalism has been evidenced to be more corporate welfare and the professed aims bear no relation to the reality.

"Accustomed to prolonged economic stagnation, they seem to have forgotten how to demand wage hikes,"

Right Kyodo and JRI Yamada-san. Workers have been living high on the hog so long they have forgotten about asking for wage increases in line with their relatively high productivity.

Penetrating economic analysis by the Japan Research Institute. They must have tortuously wrneched the data to fit Kishida's narrative of New Capitalism.

This article is prime neo-liberal Newspeak.

7 ( +17 / -10 )

Rengo, despite being a "labor union" is more on the side of business owners than workers. Despite having a long history with the CDP, they have recently shown more interest in collaborating with the LDP rather than the left-wing opposition parties, such as the example shown in this article. I think this change in allegiance is one reason for the CDP's weakness in recent elections.

Look at Zenshoren (全国商工団体連合会) for something much closer to an actual labor union, representing the interests of small local shops and businesses.

10 ( +11 / -1 )

Unions, workers voice was smashed decades ago, it’s about companies, suddenly it’s difficult for the Boss to afford the latest Toyota crown. He is not happy. It’s time to throw the workers something. Just not too much. The masses might get as greedy as the bosses, want their Share? Now that’s just not an option. If they are not happy with mud, let’s give them grass.

3 ( +7 / -4 )

The galore owners already installed a drummer for the chained rowers. Nothing has changed for thousands of years.

3 ( +4 / -1 )

Galleys’ owners, sorry, an autocorrect typo. lol

3 ( +3 / -0 )

Japan's average wages have hardly risen since the early 1990s and were the lowest among G7 advanced nations last year, according to OECD data.

Hardly? This has got to be a misprint, as it's a down right lie! They haven't risen at all. in fact they have dropped overall, as the consumption tax went from 3%, instituted in 1989, to 10% today, a 7% increase, along with increases in other taxes, and increases across the board in cost of living expenses, actual wages have decreased!

Someone needs to shoot the scales off the eyes of whomever is writing these articles!

7 ( +10 / -3 )

"I don't think labor unions are playing their role. Wages aren't rising as much as I hoped," said a 25-year-old employee at a major Japanese manufacturer and in-house union member.

Unions here are useless! The management of unions walks hand in hand with management, and kowtows to the demands of management.

Consider this, a "strike" called by a union, is openly orchestrated with management, as to the date and time, and everyone who is a union members, gathers at some park somewhere, goes "rah, rah, rah, We're on strike for ONE day!" and then all go out for drinks with management afterwards, and the next day go back to work, and management makes everyone who took a day off, put in for a day of leave, or get their pay cut for the day.

Which also will affect their bonus, because they were not at the job 100% So everyone wastes a leave day.

(Oh this is EXACTLY what happened at a Japanese company I worked at. And all the "top" union members, in turn, got promotions, and became management, so everyone knows how the game gets played)

2 ( +5 / -3 )

""new capitalism" platform to widen wealth distribution""

I have a suggestion, how about reducing central and local government employees bonuses for few years and giving that saved cash back to the people were it belongs in the first place.

There is plenty of wealth to go around and please everyone, the problem is those who are in power are taking more than their share and the poor is VOICELESS and HELPLESS as usual.

2 ( +2 / -0 )

In Japan, working union are just "party planning committee"... In my previous company, I was forced to become a member when I became a seishain (company regulation) and when I had the meeting for explaining the role of the union, the only noticeable thing was the organization of a party every year for using member fee...

When I talked about problem like harassment, the leader said "It's like that for everybody so I can't do anything".

3 ( +4 / -1 )

Unions have become a non-issue since the 90s. Can't remember the last time they were effective in any positive changes for the workers.

1 ( +1 / -0 )

Has been unspectacular

And continues to be unspectacular thanks to kishidas dithering and dawdle flimsy planning and absence of problem solving abilities

-1 ( +1 / -2 )

Not sure Japan's "life long employment" culture fits in with significant wage increases since typically the longer you work at a company, the higher your wage is supposed to be. That means those that need it most are often left out, and the wage increase goes to those in their 50s and 60s who are already making decent bank, probably already own a home or have some assets. Meanwhile, the workers in their 20s and 30s are given scraps.

0 ( +0 / -0 )

Is that a joke? Labor unions are only permitted if the to meet the status quo. Just like the press.

-1 ( +0 / -1 )

“ the wage increase goes to those in their 50s and 60s”

it depends of the sectors, companies. In the large banks, unless you are a senior executive, salaries are cut from early 50s by 30 % to 50% (progressively by 10% a year over several years not in one shot). Then when you reach 60 your are switched from permanent to 1 year contract renewed every year and the salary is usually cut again. So peak salary is around 50 and then it is downhill. On the other hand your job is guarantee until 65 even though you do not do much work.

But I guess other companies are different.

-1 ( +0 / -1 )

Japanese trade unions appear to be the Upside Down version of unions, where they work for the bosses and convince employees to agree to everything. It's a bit sad.

3 ( +3 / -0 )

The only plausible reason the LDP would be seriously canvassing wage increases would be their justifiable concern that the pendulum has already swung too far and what that augurs if they resist.

1 ( +1 / -0 )

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