Workers in Spring Struggle are demanding large corporations return a part of windfall profits to them

   The annual labor Spring Struggle is entering final stretch with the first round of management offers set for March 12.

Corporations argue ‘it is difficult to offer wage increase’

   The Toyota Motor union affiliated with the Japanese Trade Union Confederation (Rengo) is demanding a 1,500-yen pay increase in monthly salaries. However, Toyota management is reluctant to offer a higher raise than last year on the ground that “it is necessary to take into consideration the possible impact a pay raise could have on the company’s medium- and long-term competitiveness.”

In the electronics industry, Hitachi Ltd., for example, has told labor that it is difficult to offer a higher pay raise than last year, on the grounds that they are not optimistic about the sales of flat panel TVs and the effects from a slowdown in the U.S. economy.

   This year, business circles and large corporations initially argued for the need to consider raising wages from three viewpoints: global competitiveness, gross labor costs, and a stable economic growth. While confirming that they are committed to restraining wage increases, in the early stages of the Spring Struggle, they showed readiness to meet part of the labor demand by saying, “Those companies that have the ability to pay may have to offer employees a larger share.”

   But the business sector has changed its mind and begun to emphasize how difficult it is to offer a pay raise once they saw dark clouds hanging over the Japanese export business sector due to a slump in the U.S. economy triggered by the sub-prime mortgage crisis, rises in raw material prices linked to the rise in oil prices, and the strong Japanese yen in the foreign exchange market.

Record profits

   Major Rengo-affiliated company unions are demanding “modest” pay increases, as Rengo President Takagi Tsuyoshi admits.

In the auto industry, labor demands are: a 1,500 yen per month increase at Toyota, a 1,000 yen increase at Honda, and a 1,000 yen increase at Mazda.

In electronics, Hitachi, Matsushita, and Mitsubishi unions are demanding a 2,000-yen monthly raise.

All these demands are very modest in light of workers’ pressing demands for a more substantial raise. Rengo President Takagi Tsuyoshi said, “All will win raises that fully meet our demand.”

Even though Rengo unions are showing restraint in demanding wage increases, it is justifiable for workers to demand more. They are only trying to get a tiny part of the enormous profits to be returned to workers.   

Firstly, large corporations capitalized at one billion yen or more have earned record-breaking profits for sixth years in a row. According to the Financial Ministry, profits of large corporations more than doubled, from 1.5 billion yen to 3.2 billion yen, between 2001 and 2006.

Secondly, large corporations have carried out substantial cuts in labor cost.  In the 2001-2006 period labor costs decreased by more than 1,700 billion yen, from 50 trillion to 48 trillion. Labor’s share dropped from 60 percent to 52.3 percent during these five years.

If all major corporations each gave a 2,000 yen monthly pay raise to their 9 million employees, the total amount of money needed to do so would be only 329 billion yen, an increase of labor share 0.1 percentage point to 52.4 percent.

Thirdly, large corporations have benefited from the ruling parties’ corporation-first policy that includes generous tax breaks for research and development as well as for IT-related investment, and the use of the newly established consolidated taxation system.

In contrast, employees at large corporations are experiencing hardships due to tax increases including the abolition of the fixed-rate tax cuts.

It is natural for workers to demand that large corporations raise workers’ pay to ease workers’ tax burdens under the Liberal Democratic and Komei administration’s regressive taxation system that favors large corporations.

   Citing their concerns over the gloomy outlook of the world economy, large corporations argue that there will not be able to survive international competition.  However, if they are to meet workers’ modest demand for a wage increase of 2,000 yen per month for each worker, they would only need about 329 billion yen. This amount would not endanger Japanese corporations’ international competitive edge.

The need is to increase personal spending power 

Winning the full amount of pay raise demands at large corporations will set a precedent for wage increases in this year’s Spring Struggle. As the Japanese economy is likely to slow down because of its heavy dependence on foreign demand, it is increasingly important to put greater emphasis on increasing domestic demand. The need now is to swiftly raise the level of consumer spending which accounts for about 60 percent of domestic demand.

   Following the rises in the price of oil, wheat, and soybeans, and other raw material prices of food, the prices of gasoline and other daily necessities are increasing. Such a situation is compelling many citizens to cut their spending. A Nihon Keizai Shimbun survey shows that private sector full-time employees are saying that a pay raise would not help them spend more (37 percent of the respondents), that they will have to reduce their spending if they get no wage increase (32 percent), and that they would spend money if they get a pay raise (12 percent). 

   Commenting on the findings, a Nikkei column said, “When each company holds down workers’ wages in order to survive the cost-cutting competition, the Japanese economy will decline, and individual companies’ profits might fall.”

To make large companies fully meet the workers’ demand for pay raises will not only protect their living conditions but also pave the way for building a stable Japanese economy based on consumer spending.

- Akahata, March 5, 2008