The outcome of this year’s spring labor offensive, known as “shunto,” has been bleak, with major companies in such key industrial sectors as automobiles and electronics not offering any pay increases. Offers regarding biannual bonuses have also been harsh, falling below last year’s levels at most companies.

Because of the historic appreciation of the yen and the deterioration of economic conditions overseas, the business performance of the nation’s companies has been stagnant.

Under the circumstances, many major trade unions had to abandon the idea of demanding a uniform pay scale increase, a base pay raise referred to as “base-up” in Japanese, to prioritize job security instead.

Curbs on wage hikes meant to keep companies in business and workers employed tend to dampen domestic demand, thus further worsening the national economy. This vicious cycle must be brought to an end at all costs.

All businesses have a pile of knotty problems that have been left unresolved in this respect.

In this year’s shunto, labor came to the negotiating table intending to achieve regular pay raises based on employees’ age and length of employment, known as “teiki shokyu” or “teisho.”

The Japan Business Federation (Keidanren), the country’s largest employers’ organization, expressed caution, saying it was no longer possible to consider implementation of teisho raises as a matter of course.

Most major companies, however, have managed to accept labor demands for the teisho portion of pay raises.

Salaried people in the prime of their lives have seen their living expenses increase year after year, especially for the rearing and education of their children. It is reasonable and proper for management to have paid due attention to such realities.

The pay hikes offered by some companies in this year’s shunto likely reflect corporate managers’ desire to reward, even slightly, their employees’ dedicated efforts to rebuild factories struck by the Great East Japan Earthquake and their perseverance in working late at night and early in the morning to save electricity.

However, corporate managers are naturally limited in what they can do.

Electronics giant NEC Corp. presented in a meeting with its trade union on Thursday a set of proposals to cut ordinary employees’ wages, including a 4 percent cut in monthly salaries for nine months.

Another major electronics firm, Sharp Corp., is also said to be considering a freeze on teisho raises for a certain period of time.

Although the uptrend in the yen’s exchange rate has paused in recent days, the Japanese currency is still too high from the perspective of export industries.

The economies of Europe are expected to log negative growth this year, while the swift growth of such emerging economies as China seems to be weakening. The future of overseas demand is increasingly shrouded with uncertainty.

In addition, manufacturers in China and South Korea have become increasingly formidable rivals for their Japanese counterparts, in terms of price competitiveness and product quality. International competition is bound to keep intensifying.

However, positive signs have begun to emerge. The Nikkei Stock Average at the Tokyo Stock Exchange’s First Section has climbed back above 10,000, spurred by such factors as improvement in the U.S. economy.

Major Japanese companies are recovering from the serious blow dealt by the March 11 disaster and are expected to post higher profits in fiscal 2012, compared to huge drops in revenues for this fiscal year that ends on March 31.

We strongly hope they will have the momentum for a come-from-behind surge in business activity.

It is critically important for businesses to carve out private-sector fields with high growth potential to ensure greater corporate profitability. Now is a good time to create new demand on the strength of recovery projects from the March 11 earthquake and tsunami disaster, such as new energy-saving businesses and transportation systems.

The government, for its part, must flexibly support corporate endeavors, through such means as low-interest loans as part of industrial policy and tax breaks on capital investments.

(The Yomiuri Shimbun)

(Asia News Network)