Japan’s most influential business lobby plans to ask member companies to demonstrate their “social responsibility” by granting wage increases that beat inflation during upcoming wage negotiations, its final draft policy showed on Tuesday.
The Japan Business Federation’s guidelines, known as Keidanren, for company executives discussing collective bargaining with unions in annual “Shunto” wage negotiations come as Prime Minister Fumio Kishida has urged companies to offer above-inflation wage increases as part of his “new capitalism” growth – and redistribution policy.
However, it remains to be seen to what extent the companies will comply with Keidanren’s request, which was accepted and announced on 1.17.
At a press conference on Tuesday after a meeting of senior Keidanren officials on the content of the guidelines, Chairman Masakazu Tokura called for “wage increases throughout the supply chain” and indicated that he would like to see wage increases in a variety of companies regardless of their size.
The group’s proposals aim to encourage companies to monitor price fluctuations closely, while urging them to maintain and improve the momentum of wage increases as part of their social responsibility.
The final draft also said that rising prices represent an opportunity for Japan to shift out of the deflationary mindset that has long plagued the country’s economy and stressed the need to create a “virtuous cycle between wages and prices”.
Rising global demand for oil and other commodities in light of Russia’s invasion of Ukraine has pushed up their prices, and the Japanese yen’s weakness against other major currencies has also increased import costs.
As a result, more and more companies have passed on higher costs to consumers, hitting them hard while wage growth has not kept pace with accelerating inflation.
Core consumer prices in Japan rose 3.7 percent in November, a nearly 41-year high.