Varied Agenda in Japan's Wage Talks

Varied Agenda in Japan's Wage Talks
Photo Credit: AP / 達志影像

What you need to know

The behavior and mindset of Japanese businesses need to change in order to fundamentally address the labor problems in the country.

As the annual union-management wage negotiations effectively get under way, many of the long-standing problems in the nation’s labor/employment practice come under increased scrutiny, such as the notoriously long working hours of many corporate employees and the steep gap in conditions between regular full-time employees and workers in irregular positions. In its policy for this year’s union talks released this week, Keidanren (Japan Business Federation) urged its member firms to take steps to eliminate the problem of overwork of their employees. The question is how serious the businesses will indeed be about taking action beyond mere slogans.

The problem of overwork has been highlighted once again — and put the business community on edge — following revelations last year that a 24-year-old worker of Dentsu Inc. killed herself in 2015 after suffering from depression caused by overwork, and that the overwork of employees at the nation’s top advertisement agency had not ended even after the 1991 suicide of another young Dentsu worker exposed the responsibility of business management to prevent the health impairment of their staff from excessive work hours, but continued as a prevalent problem among its workers that violated agreements with its labor union. The scandal led to the resignation of Dentsu’s president, and an investigation is underway for suspected violation of labor laws.

Overwork-induced health damage of workers, including ones that lead to their deaths or suicides, has been a problem since the late 1980s. But government reports show that the root problem of long working hours remain widespread among Japanese firms. The Health, Labor and Welfare Ministry said this week that its supervision last year of some 10,000 companies suspected of having employees who work more than 80 hours of overtime a month — a criteria at which workers’ health problems would be linked to overwork — showed that 44 percent of the firms engaged in violation of labor laws, including overtime work exceeding the limits under their union agreement. Some were found to have manipulated the work records of the employees to make it look like they worked fewer overtime hours than they actually did. Some 2,400 companies had employees who clocked more than 100 hours of monthly overtime, including 116 firms with staff working overtime for more than 200 hours a month.

The administration of Prime Minister Shinzo Abe, who kept telling businesses for years to raise worker wages, is also seeking to reduce the corporate employees’ long working hours as part of his “work-style reform” drive. Abe is said to be weighing the introduction of a legal cap on overtime hours. But that alone will not likely end the overwork woes of many corporate employees. Businesses should realize that their behavior and mindset need to change to fundamentally address the problem. Some major companies are starting to take steps — motivated by the need to increase the workers’ productivity and secure manpower amid the growing labor shortage.

Abe has also pledged to close the wide gap in wages between regular and irregular workers, releasing late last year a draft guideline in the administration’s avowed efforts toward an “equal work, equal pay” principle. But it will actually depend a lot on the behavior of businesses responding to the guideline to effectively improve the conditions of irregular workers, who have come to account for 40 percent of the nation’s workforce.

On wage hikes, businesses are more reluctant now than in recent years to give significant raises due to increased uncertainties over the course of the global economy — a factor exacerbated by the unpredictable policies of incoming U.S. President Donald Trump. Major export-oriented manufacturers, in particular automakers and electronics firms whose negotiations with their unions serve as a trend-setter for other industries, are jittery over the fluctuations in the yen’s exchange rate against other currencies, which heavily affect their earnings.

Trump’s victory in the November election led to the yen’s steep fall — a reversal of the trend from early 2016 — on hopes that his promised large-scale tax cuts, deregulation and infrastructure investments will drive the U.S. economy. But the yen has again been gaining strength amid the president-elect’s protectionist statements — such as his tweets threatening to impose heavy border taxes on companies investing in Mexico to export to the U.S., including Toyota Motor Corp., and a media interview remark suggesting he may seek to drive down the dollar to make American industries more competitive.

Business management may have legitimate concerns. But it should be realized that the annual 2 percent-plus wage hikes over the past three years under Abe’s watch — which the administration likes to tout as the highest in years — do not amount to much if routine seniority-based raises built in the pay scales are not included. The raises have not been robust enough to drive a recovery in consumer spending. Companies that can afford to should offer substantial raises to their employees.

The News Lens has been authorized to republish this editorial. The original can be found here.

Editor: Olivia Yang