Keidanren backs calls for pay hikes under ‘new capitalism’

The Japan Business Federation, or Keidanren, urged its member firms on Tuesday to raise employees’ pay in support of “new capitalism” proposed by Prime Minister Fumio Kishida.

Companies that have seen their performances recover from the turmoil due to the novel coronavirus crisis “are desired to (conduct) pay increases appropriate for the initiation of new capitalism,” such as pay scale hikes, Keidanren said in a special committee report.

The report will serve as the guidelines for the management side in this year’s shunto pay negotiations with the labor side.

Considering widening gaps in the pace of earnings recovery among companies, meanwhile, Keidanren stopped short of adopting a single numerical target on pay hikes.

Last year, the average increase in monthly pay among large companies came to 1.84%, slipping below 2% for the first time in eight years, according to a Keidanren tally.

In the autumn, Kishida voiced expectations that companies that saw their earnings recover to the levels before the pandemic will carry out pay hikes of over 3%.

While business performances are improving among exporters, mainly manufacturers, it is uncertain to what extent nonmanufacturers, including hotel and restaurant operators, can raise wages at a time when infection cases of the omicron variant of the coronavirus are surging.

“The labor and management sides will be deciding (on pay increases) while checking their company’s ability to pay and other conditions,” Tetsuji Ohashi, vice chairman of Keidanren, told a news conference.

There will be “no across-the-board pay increase,” Ohashi stressed. “Industries in tough situations should prioritize efforts to continue operations and maintain jobs.”

Elsewhere in the report, Keidanren stressed the importance of “maintaining the momentum of pay increases.”

It urged large companies to “stand in a social perspective,” such as accepting a hike in transaction prices by small and midsize firms, which employ 70% of the country’s total labor force, to support their pay hikes.

The report also underscored the significance of creating an environment that enables both men and women to easily continue work while raising children and taking care of elderly family members, as women currently tend to shoulder more burdens than men.

In the upcoming shunto talks, the Japanese Trade Union Confederation, or Rengo, is expected to demand an overall pay increase of around 4%, including a pay-scale hike of some 2%.

This year’s shunto is scheduled to kick off at a management-labor conference on Jan. 25 and shift into full swing after a Keidanren-Rengo meeting on Jan. 26.