Shunto, or the Spring Offensive 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 Japanese traditional compensation and bonus systems work, see our video below:
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