Shunto, or the Spring Offens
ive is kicking off in Japan – where the company unions square up to the company management to negotiate across the board pay rises for the new financial year, starting April 1 2013.
Prime Minister Abe has asked companies to allow wage rises as part of his Abenomics of reflating the economy. Business federations are sounding less than enthusiastic about this – pointing out that the positive effect of the weaker yen won’t be felt until later in the fiscal year. Many companies have already cut wages of the non-union management level staff as part of their restructuring efforts this year. Overall, Japanese salaries have shrunk in real terms over the past decade or so – a Japanese worker in their 30s is earning 15% less than in 1997, according to a National Tax Agency survey in 2011.
The ritual negotiations may seem baffling to non-Japanese as demands are expressed in terms of bonuses being paid as a multiple of months, or across the board salary raises for seniority based grades. SInce the post war period, workers were only paid in effect 1/18 of their salary each month, and the remaining 6/18 was paid in two annual lumps, just before New Year and summer. Since then, the bonuses have declined to less than 5 months in total. Each of the main company unions such as Toyota set the tone for their sector by demanding a certain bonus level,and/or a certain percentage increase in the seniority based increments, as does Rengo, the Trade Union Federation. Emboldened by Abe, many are indeed demanding raises, and I would imagine there will be more than usually heated debates, public demonstrations and maybe even some strikes – although these quite often start 17:00 and finish by the next day, so as not to affect customers and the business!
For more on how pay works in Japan, see my recent presentation to The High Pay Centre here on SlideShare:
For more content like this, subscribe to the free Rudlin Consulting Newsletter.
