Unusual message from Keidanren: It's time to raise wages

The Japan Business Federation (Nippon Keidanren) took the unusual step Wednesday of encouraging member firms to raise wages, emphasizing that both earnings and employee income must rise to maintain the economy's growth potential.

"Japan should seek to build an economy supported by both companies and households," the nation's most influential business lobby said in a position paper that its members customarily use as a guideline for the annual labor negotiations in spring.

The business group said it is afraid consumption might slow despite the improving employment situation because the termination of income tax breaks and a rise in pension premiums are threatening to eat into consumers' net income.

The new Keidanren policy comes as wage growth in Japan remains stagnant even though corporate earnings are expected to hit record highs for the fifth consecutive year amid continuation of Japan's longest postwar economic expansion.

Some of the growth in value-added should be set aside for raising personnel costs, Keidanren said.

"Companies that have improved earnings may want to raise basic wages," said Nippon Yusen K.K. Chairman Takao Kusakari, a Nippon Keidanren vice chairman who heads the lobby's Committee on Management and Labor Policy, which drafted the position paper.

The Keidanren paper is expected to prompt unions to negotiate harder with management during the spring talks.

The position paper also called for achieving a work-life balance through promotion of paid holidays and reduction of overtime.

The paper repeated that Keidanren still deems it unacceptable for companies to grant across-the-board wage hike demands, because their wage-paying capacities differ. It also repeated its position that temporary earnings improvements be reflected in bonuses instead of basic monthly wages.