The headline numbers for pay hikes being granted by Japan's biggest and most prestigious firms in this year's shunto negotiations are strikingly high. Auto companies like Toyota and Nissan have fully accepted union demands and are giving the highest raises in years. At steel companies, the headline number is as much as ¥30-35,000 ($200-235) per month. Although most unionized workers won't get hikes this large, the giant Rengo union federation hopes that their members will get an increase of around 5%.

            While all of this is good news indeed, no one should think that Japan's labor force as a whole is in line to see income go up 5%. The headline number can create a misimpression. For one thing, only 16% of all employees are unionized and non-unionized workers are likely to get far less, just like last year. More importantly, the headline number is a combination of "base pay" and "seniority raises." Only the base pay segment results in increased income for the labor force as a whole. In 2023, out of a headline number of 3.58%, base pay increased by just 2.12%.

For details, see https://richardkatz.substack.com/p/shunto-why-4-5-headline-wage-hike

Richard Katz

The Contest For Japan's Economic Future: Entrepreneurs Vs. Corporate Giants