TOKYO - With deflation crippling
the Japanese economy and companies losing
competitiveness in global markets, many labor unions
will have no choice but to accept pay cuts during the
annual wage negotiations slated to take place next
spring, the Japan Business Federation (Nippon Keidanren)
said in a report released on Tuesday.
The
report, issued by the Keidanren's labor policy
committee, is used by management as guidelines in its
negotiations with labor. Although it will not become the
basis for negotiations at every company, the report will
make it easier for management to call for pay cuts.
Thus, its suggestions are expected to have a significant
impact on the upcoming negotiations.
In its
previous report issued for this year's wage
negotiations, the predecessor to the current Keidanren
stated that "wage hikes are out of the question" and
called for a freeze on base wages.
The Japanese
Trade Union Confederation (Rengo), the nation's largest
labor organization, also gave up on calling for base
wage hikes, leaving the matter up to separate labor
management negotiations. As a result, many labor unions
ended up accepting a freeze on base wages.
The
report released for next spring represents an even
harsher stance by management. Not only are wage
increases off the table, but "the negotiations should
include a freezing and reassessment of the periodic wage
increases based on age and seniority".
Furthermore, the report emphasizes that "many
companies will be forced to cut wages to maintain jobs".
"Reducing labor costs, including wage cuts, is
absolutely necessary" to maintain jobs, improve
productivity and increase profitability, said Masaharu
Shibata, vice chairman of the Keidanren.
Rengo
is prepared to refrain from requesting base wage hikes
for the second consecutive year, but has not considered
the possibility of wage cuts.
