Equitable Wage Growth: The Role of Japanese Labor Unions and Small Businesses

Equitable Wage Growth: The Role of Japanese Labor Unions and Small Businesses

Tomoko Yoshino, the leader of the Japanese Trade Union Confederation (Rengo), Japan’s largest labor union, has put forth the argument that for sustained wage growth in the country, smaller Japanese businesses need to be able to pass on costs to customers. Yoshino firmly believes that wage boosts should not be an exclusive privilege of large urban corporations. Rather, regional, small and medium-sized firms, along with irregular workers, also deserve their share of the pie. She advocates for the revitalization of companies in provincial areas as a critical step towards a balanced economy. This perspective provides a broader understanding of Japan’s economic strategies, emphasizing the role of labor unions and smaller enterprises in shaping wage dynamics.

The Call for Wage Hikes

Recently, Prime Minister Fumio Kishida urged business leaders to increase wages during next year’s ‘shunto’ spring labor-management negotiations, pushing for a higher increase than this year. This move is part of the government’s efforts to raise disposable incomes, including through wage hikes. The meeting also broached the subject of reflecting higher labor costs in prices. This three-way discussion, held for the second time this year, is a vital part of the process leading up to Keidanren, Japan’s most influential business lobby, adopting its shunto guidelines for management early next year. Rengo plans to demand pay hikes of at least 5% in next year’s shunto.

Subaru Responds to the Call

Subaru, the Japanese automaker, in light of recent labor deals, has decided to raise the wages of its U.S. plant workers. The plan stems from the Detroit Three’s union contracts, which are expected to lead to wage increases of 25% through 2028, potentially reaching 33% once the anticipated cost-of-living adjustments are factored in. Subaru is also contemplating augmenting benefits along with the pay increases, although a final decision is yet to be made. This move by Subaru and other non-union automakers comes in response to pressure to enhance pay and benefits following the record contracts achieved by the United Auto Workers (UAW) in late October.

Implications and Future Prospects

Subaru’s plan to raise wages and benefits for its U.S. plant workers symbolizes the increasing importance of labor unions in negotiating better deals for workers. With U.S. President Joe Biden stating that all U.S. auto workers should have the same deal as those the UAW negotiated with the Detroit automakers, it is evident that the momentum is swinging towards more equitable pay structures. This development resonates with Yoshino’s call for more balanced wage growth across different business sizes and regions, reinforcing the significance of labor unions and smaller enterprises in influencing wage dynamics.