Kishida courts Japan’s biggest labor

organization amid wage hike call

Prime Minister Fumio Kishida asked business leaders on Wednesday to raise wages more aggressively for employees, as part of his pursuit of wealth redistribution.

Ahead of this year’s annual wage negotiations between management and labor unions, Kishida, who took office in October, is calling for a pay hike of over 3% by companies that have seen their earnings recover to pre-pandemic levels.

“Wage hikes mean future investments. It’s critically important for future economic growth. I’d like to see you take an aggressive stance and cooperate,” he told a meeting of business leaders who had gathered for New Year celebrations.

Kishida said the country needs to set in motion a “virtuous cycle of growth and distribution” at a time when recovery from the pandemic comes with opportunities for a new era.

The gathering was organized by the Japan Business Federation — the country’s most powerful business lobby, also known as Keidanren — as well as the Japan Association of Corporate Executives and the Japan Chamber of Commerce and Industry.

Kishida has placed a priority on creating a new type of capitalism by ensuring both economic growth and wealth redistribution.

Accelerating wage growth, which has been sluggish in Japan as the country had been plagued by deflation for years, is a key part of his agenda, and the government plans to offer tax reductions for companies going ahead with pay hikes.

Keidanren chairman Masakazu Tokura aligned with Kishida over the need for companies to raise pay proactively if they have remained profitable despite the impacts of COVID-19.

“It’s the responsibility of companies to distribute (income) to workers. Otherwise, we will lose our raison d’eter,” Tokura said at a press conference after the meeting.

The shuntō wage negotiations this spring come as the recovery from the COVID-19 pandemic remains patchy with its pace uneven across sectors.

The Japanese Trade Union Confederation — the country’s biggest labor organization, also known as Rengo — has decided to call for a combined 4% pay hike, with around 2% increase in pay scale and 2% in annual pay.

Keidanren, meanwhile, does not plan to encourage its member companies to consider wage hikes across the board.

On Wednesday, Kishida also attended a New Year’s party held by Rengo — unnerving Rengo-linked opposition lawmakers. Kishida is the first sitting prime minister from the Liberal Democratic Party to have attended a New Year’s party held by the labor union’s national center since 2013, when then Prime Minister Shinzo Abe was present.

The move by Kishida appears to be part of the LDP’s efforts to drive a wedge between Rengo and the parties it supports — the main opposition Constitutional Democratic Party of Japan and the Democratic Party for the People — ahead of this summer’s election for the House of Councilors.

“We’ll thoroughly implement economic measures to protect people’s lives, businesses and jobs,” Kishida said in a speech at the party, while expressing hopes for drastic pay hikes in this year’s shuntō wage negotiations.

“The Upper House election is an important election. We want you to also support the ruling camp to help ensure political stability,” he said, seeking Rengo’s help.

The function was also attended by Chief Cabinet Secretary Hirokazu Matsuno.

When Rengo’s new president, Tomoko Yoshino, visited the LDP’s headquarters last month, party Secretary-General Toshimitsu Motegi told her that he will welcome policy proposals from Rengo. Her visit was the first by a Rengo president in seven or eight years, according to a source.

Since Kishida took office as prime minister in October last year, the LDP has increased its contacts with Rengo. The LDP is apparently aiming to attract support from Rengo member unions in the private sector, which have different opinions from their public-sector counterparts in many areas.

Yoshino told a press conference Wednesday that she feels “very honored” that Kishida attended the New Year’s party.

But Rengo-backed parties are growing concerned. Kishida “made the move ahead of the Upper House election,” a CDP source said.