Japan's largest labor union to call for 5% pay hike, highest in 28 yrs

Japan's largest labor union decided on Thursday to demand a pay hike of around 5 percent in annual wage negotiations starting next spring, the highest in 28 years, to catch up with rising inflation.

The Japanese Trade Union Confederation agreed to ask for the 5 percent pay rise, including a base-pay increase of around 3 percent, and call for a minimum hourly wage of at least 1,150 yen ($8), the same level as 2022 annual negotiations.

The request, the highest since a range of 5 to 6 percent sought in 1995, reflects tepid wage growth over the past decades in Japan that have hardly kept up with soaring inflation. Wage growth remains sluggish in Japan even after rebounding from a recent low of around 1.6 percent among major companies in 2003.

The union, also known as Rengo, had consistently called for a 4 percent pay hike in spring negotiations from 2016 to 2022.

"It is Rengo's duty to revive the economy by raising wages, which would boost consumption," said Tomoko Yoshino, head of the union, stumping in front of JR Shimbashi Station in Tokyo to promote the union's call to passersby that day.

Workers won an average raise of 2.07% to base and seniority-linked pay together in wage talks this year, according to the union. The figure compares with a 3.6 percent jump in Japan's October core consumer inflation from a year earlier, the fastest pace in about four decades.

The Japan Business Federation, the country's biggest business lobby known as Keidanren, is considering urging their member companies, consisting of many major firms, to increase wages.

But it remains uncertain how far companies can meet the union's demand. The business environment has become increasingly difficult for many industries due to rising energy costs. The yen's slide to its lowest levels in decades against the U.S. dollar also adds pressure on importers by lifting overseas purchasing prices.

Wage talks are crucial for Prime Minister Fumio Kishida, who has repeatedly called on companies to raise wages to keep pace with rising prices.

Inflation has become a major challenge for the premier, who has faced a sharp drop in support ratings.

Wage negotiations will culminate in March when major companies decide on their responses to their labor unions' requests.

© Kyodo News