Kishida Says Wage Gains Most Important Part of ‘New Capitalism’
(Bloomberg) -- Japanese Prime Minister Fumio Kishida emphasized Wednesday the central importance of wage gains for his agenda of tweaking the way businesses and the economy operate to ensure a fairer distribution of income and stronger growth.
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“Wage increases are the most important issue for ‘new capitalism,’” Kishida said Wednesday.
While acknowledging that many big firms had already signed off on higher pay deals in this year’s spring pay negotiations, he said optimizing dealings between big businesses and small and medium-sized firms was also a necessary factor to ensure those firms could also raise wages.
“The gender pay gap and raising wages for non-regular workers are also extremely important,” he added.
The meeting was the first formal gathering of leaders from government, labor and business in eight years, and comes as the annual negotiations reach an initial conclusion this week.
The wage talks have been attracting extra attention since Kishida called on companies for raises that exceed inflation, which is at a four-decade high. The main union group, Rengo, has called for a wage hike of around 5% and is due to announce its initial results on Friday.
Wage gains are also a key focus for the Bank of Japan as it looks for signs that inflation can last so it can pare back its massive easing program. If bigger paychecks eventually trigger normalization at the central bank, it could jolt investors across the globe.
Kishida said he was aiming for a fairer form of capitalism in Japan when he took the premiership, but has so far made little concrete progress in realizing that goal.
With inflation topping 4%, real wages have been falling since early last year, an outcome that shows household spending power weakening instead of improving under his watch.
Many larger firms have already announced wage hikes, with Hitachi Ltd. accepting its labor union’s demand for a 7,000 yen ($52) monthly raise — more than double last year’s increase. Panasonic Corp. and Toshiba Corp. also agreed to raise pay by similar amounts. It’s unclear, however, whether smaller employers will follow suit.
“We’re seeing strong wage hike moves led by large companies,” Chief Cabinet Secretary Hirokazu Matsuno told reporters earlier Wednesday. “As the spring wage negotiations comes into full swing for smaller firms and in the regions, we need to get this momentum to spread to these companies, too.”
In further signs of growing confidence to hike pay among bigger firms, 43 unions said they’ve managed to win wage hikes of 8,407 yen per month on average this year, according to the Japan Council of Metalworkers’ Unions. That’s the highest amount since 2014 when comparable data became available.
“The results so far look unprecedented. We could not be more pleased with the responses, which were in line with our demands,” said Akihiro Kaneko, head of the metalworkers’ union group. “The key is how far we can expand this momentum.”
--With assistance from Paul Jackson.
(Updates with comments from Kishida)
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