Japan's largest labor union umbrella group, Rengo, is demanding the biggest salary increase in over 30 years. The group, which has about 7 million members, said on Thursday that its survey found member unions were seeking an average wage hike of 6.09% for this year. This is the first time in 32 years that they have asked for more than 6%.
The union's demand could mean another year of sizeable wage increases to be agreed in annual talks between unions and employers. Prime Minister Shigeru Ishiba sees these increases as key to Japan's economic progress. Last year, Japanese companies agreed to an average 5.1% wage hike following a 3.5% rise in 2023.
Broad-based pay increases are also a prerequisite for the Bank of Japan to continue monetary policy normalization. The central bank only last year ended a decade of massive monetary stimulus and in January raised its short-term interest rate to the highest level since 2008.
The union's demand provides validation for the BOJ, which sees wage-fueled inflation as the basic rationale for nudging rates higher. A majority of economists polled by Reuters expect the BOJ to hike rates once more this year, most likely during the third quarter.
The prospects of a further increase in borrowing costs strengthened the yen to below 148 per dollar after the union's survey results were announced.
Rengo's member unions had sought an average 5.85% increase around this time last year. The group this year is focused on narrowing the income gap that separates workers at smaller firms and those at large companies. The average wage hike sought by unions with less than 300 members stands at 6.57%, the largest since 1994. Smaller firms are already spending far more of their profits on wages than their bigger counterparts and could struggle to keep hiking pay.
Annual wage talks between management and labor unions typically conclude around mid-March at major firms, with agreed pay increases going into effect a few months later.
8 Comments
Eugene Alta
This is great news for the economy. Higher wages mean more spending and a boost for businesses. 📈
BuggaBoom
This is not a sustainable solution. We need to find ways to make the economy more competitive. 🏆
Eugene Alta
There are better ways to boost the economy, like investing in infrastructure and education. 🏗️
Noir Black
This is a win for workers, consumers, and the overall economy. Let's keep the momentum going! 🚀
Loubianka
Good for Rengo! We need more bold action to address the inequalities in our society. 👏
Muchacho
This is going to backfire. Businesses will just raise prices to offset the higher wages, and everyone will be worse off. 💸
Donatello
Rengo is leading the way for a more just and equitable society. Let's hope other unions follow their example. ✊
Muchacho
This is a victory for all of us! Let's celebrate and continue pushing for a more equitable future. 🥂