Japanese Prime Minister Shinzo Abe’s administration’s goal of expanding the economy by 20 percent is “pie in the sky,” said Japan’s top labor union leader, who also warned that policymakers have unrealistic hopes for strong pay gains.
Japanese Trade Union Confederation (RENGO) president Rikio Kozu said his group had adjusted its negotiating stance because it does not think that the nation has fully escaped deflation.
RENGO is seeking an increase of “about” 2 percent in monthly base wages for next year after falling short this year in a push for hikes of “at least” that amount, he said.
This signals that Abe and Bank of Japan Governor Haruhiko Kuroda might not see the rising incomes they need to spur consumer spending and revitalize the economy.
Kuroda said he would be watching spring wage talks with “great interest” while Japanese Minister of Finance Taro Aso went as far as to say unions should target pay hikes of 3 or 4 percent.
“People can make these kind of comments because they do not know how labor negotiations actually work,” Kozu, 59, said in an interview in Tokyo on Friday last week. “If we could get big results by elevating our claims, we’d push them up endlessly.”
The unions in RENGO represent about 6.8 million workers and based on a tally in July, 2.1 million members won base-wage gains of about 0.7 percent this year.
Kozu — who took the top union job in October after starting his career in the steel industry in 1979 — has never gone on strike.
In Japan, employers and company-based unions tend to cooperate rather than fight, the legacy of a crackdown on aggressive unions during the US occupation following World War II.
It is a system that worked well in Japan during the post war growth decades but it is now being questioned as Japan struggles to revitalize its economy.
He is particularly mindful that seeking a high target such as 3 percent would have little chance of success with small and mid-size companies, Kozu said.
“If I were running the company, I’d say ‘this can’t apply to us,’ and that would be the end of it,” he said.
Abe has said that he wants to expand Japan’s nominal GDP by 20 percent to ¥600 trillion (US$4.95 trillion) in the next five years.
That target is impossible, Japan Association of Corporate Executives chairman Yoshimitsu Kobayashi has been reported as saying.
Kozu said export-focused manufacturers have benefited in recent years because of the weak yen, and noted the central bank has been making a lot of effort to help the economy.
Confidence in Japan’s economy among large manufacturers unexpectedly held up in the past few months, the central bank reported yesterday in Tokyo.
The Bank of Japan is set to announce its policy decision on Friday.
RENGO is concerned about a schism between workers who have stable, full-time jobs with benefits, and those who are part time and temporary workers with much less security and benefits.
“People are not going to spend money when it’s these jobs that are increasing,” he said.
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