Wednesday, March 19, 2014

Roger Agustin

Musings of Sarariman:
The Spring Offensive and
the Land of the Rising Wage

March-April 2014

Spring is the season of a new start, also marking the transition from a cold and dull winter. In a sarariman’s world, it also marks the start of another fiscal year. It is a very busy season to complete all work by the end of March, and in April a fresh start for everything, new employees, and new projects.

Before you have seen this article, many of you should have noticed the word 春闘 (Shunto) appearing on TV screens and newspapers starting February.   Daily reports and commentaries focus on this topic until the end of March. 春闘, literally translated as “Spring-Fight” also stands for terms like 春季生活闘争 or 春季闘争 or春季労使交渉. It is usually translated as the Annual Spring Labor Offensive or a better definition would be the Annual Spring Wage Bargaining Round. Although the general intent of Shunto is to improve working conditions not only by wage hikes but also includes reduced working time, it has focused mainly on the annual wage increase negotiations between unions and the employer, and thousands of these unions go through the negotiations simultaneously from the beginning of February. The Shunto movement is based on a major premise that wages should also be raised equivalent to the rise in consumer prices after the post-war phenomenal economic growth. The Trade Union Confederation or the Rengo (連合) customarily sets a specific “base-up”    (ベア) target to aid its affiliate member unions in negotiating for the wage increases. The big powerful unions from the steel, automotive and electronics industries lead the first negotiations with management and when they have secured their own deals, the smaller and weaker unions are able to follow them, and they do also impact the non-unionized workers or other workers with restricted union rights. It is easy to imagine that the Spring Offensive, as the word itself, would mean labor disputes and disruptive strikes when negotiations break down. But Japanese-style strikes are worlds apart from what we would see in other countries. They take place within a very limited time, a day or for a few hours, arranged in advance with the management so they are not intended to disrupt production. It does make sense and is more aligned to my thinking about win-win negotiations. I only experienced the massive and disruptive strikes almost three decades ago by the Japan National Railways unions (JNR which is now the JR train company) before it was privatized. Therefore, a radical labor movement that causes inconvenience to the masses will only invite protests and criticisms. When I started working at a Japanese company, Shunto barely affected me at all. Since we were all automatic members of the labor union, the negotiations seemed to be done by pre-designated representative members who were wearing headbands but never have I seen rallies or strikes to push for what the unions were asking for. Those were the days when the bubble economy burst and the start of a slow and painful economic recession. 

Since then and for almost two decades, Japan has fallen into a slow, stagnant, or even negative economic growth that caused a long period of deflation which also reduced the worker’s bargaining power for higher wages. The major unions were forced to restrict their demands and even had to accept zero wage offers from the employers. With a weak bargaining power under low economic growth and fierce global competition, the negotiations have shifted from demanding higher wages to just protecting the existing pay structure and ensuring job security. 

However, the so-called Abenomics has created an impression of positive impact on the economy. One of the key tenets of Prime Minister Abe’s structural reforms is the need for wage growth that he called upon Japanese corporations to increase wages that would promote consumption, revive the stagnant economy, and finally emerge from deflation. Even the Japan Business Federation (Keidanren) has backed up the call and trade unions have asked companies to share their profits generated by the Abenomic’s stimulus policies by increasing the base salary (called as ベア or base-up) this year, the main focus of the 2014 Shunto event. It is not a mere coincidence because aside from just the positive economic growth expected, the increase in the consumption tax from 5% to 8% starting April 1 this year was approved so the wage increase also has to be generous enough to compensate or offset the said tax hike. 

The Abenomics effect indeed brought some optimism and put the 2014 Shunto into an upbeat mood. But there are also opinions that Shunto is fading into obsolescence and outliving its usefulness and has come to be just an annual event, like a show played by the company unions. It could have failed to adapt to the changing times and has adhered to the age-old pay system that has formed the foundation of lifetime employment and seniority-based wage system. I may agree to it because I am a part of a different system based solely on performance. Or it is the time to revisit the Shunto’s reason for existence, align itself with the realities of global market competition and expand its scope to cover non-unionized workers, including part-time workers who had never enjoyed the fruits of the so-called Spring Offensive. 

I hope the so-called Abenomics effect becomes sustainable and everybody gets a blooming paycheck in Spring! 

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