Japan Union Head Calls for Government to Accelerate Wage Efforts

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(Bloomberg) — The head of Japan’s metalworkers union urged the government to accelerate efforts to raise wages, while expressing concern about early tightening steps from the central bank.

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“We need to see improvements this year,” said Akihiro Kaneko, president of the Japan Council of Metalworkers Unions, speaking about government measures to help small businesses shift costs to customers across the supply chain.

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“We will never achieve any improvement if we delay these efforts for the next five or 10 years,” Kaneko said in an interview with Bloomberg on Tuesday. JCM has two million members across five industries, including automotive, electronics and metals.

Kaneko’s comments come as Japan prepares for annual wage negotiations that culminate in the spring. For next year’s negotiations, the union announced a record goal of a monthly wage increase of 12,000 yen ($79) or more. This follows the jump of 9,055 yen achieved this year, after the union initially demanded at least 10,000 yen. Although this goal was not achieved, this year’s result saw a significant jump from 5,391 yen in 2023 and 1,820 yen in 2022.

“We need to send a clear message that we are aiming higher,” the union leader said.

Echoing other trade union leaders, Kaneko suggested the wage gap between small and large companies should be addressed. Speaking as a representative of manufacturers across Japan’s supply chain, Kaneko said the government could implement legally binding measures to punish companies that fail to promote fair trade practices. Kaneko said there are different methods to enhance the effectiveness of these efforts, which would allow small businesses to keep up with wage increases.

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In 2024, workers at large companies with at least 1,000 employees received an average wage increase of more than 12,000 yen, while workers at small companies with fewer than 300 employees received an average wage increase of less From 8,000 yen, according to JCM’s final tally in August. . Nearly 70% of companies in JCM are small businesses.

The upcoming wage negotiations are being closely watched by the Bank of Japan, as sustained wage growth is a key component of a virtuous economic cycle, and a precondition for the bank’s next interest rate hike.

With the Bank of Japan’s decision looming next week, Kaneko said there was not enough evidence to support an immediate rate hike. He said: “I am not convinced that raising interest rates now will ensure the continuation of the good economic cycle.” “It is uncertain whether moving too quickly toward further rate hikes is the right approach.”

Kaneko added that personal consumption must be on track before the central bank can justify another rate hike. The central bank is scheduled to issue its next policy decision on December 19.

Separately, Kaneko suggested that companies need to allocate more of their standard profits to workers and make the distribution of profits fairer. He cited Finance Ministry data showing that the share of profits going to shareholders and retained earnings rose by more than 80% in the decade to 2023, while labor’s share of profits rose by only about 10%.

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“We can say that the Japanese economy is now controlled by foreigners,” the union president said, pointing to the fact that a large portion of the country’s stock market is held by foreign investors. “I think we need policies that focus more on building national power.”

The president also stressed that Japan needs to raise wages to a level similar to global standards, with the country’s wage level remaining below the average in OECD countries. “If Japan cannot meet its labor needs domestically, we must create conditions that attract foreign talent to work with us,” he said.

Kaneko, who represents workers’ interests at Japan’s major exporters, from auto giant Toyota Motor Co. to electronics maker Panasonic Holdings Co., said the next U.S. president’s policies will be crucial to their industries. During the campaign, President-elect Donald Trump repeatedly threatened to impose 60% tariffs on China and global tariffs on the rest of the world.

In his first concrete action, Trump announced that he would impose 25% tariffs on all goods coming from Mexico and Canada. Kaneko believes that this step represents a great risk, especially for the automobile industry, given the importance of the North American market.

Meanwhile, Kaneko, who also heads the Auto Workers Union, believes labor unions should not be influenced by potential risks associated with US policies.

“If unions start lowering their demands because of concerns about Trump, they won’t do their part,” he said.

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