Fukuda calls for wage raises to boost economy

Prime Minister Yasuo Fukuda urged companies Thursday to raise wages in a rare move by a government leader amid intensifying annual labor-management wage talks.

"I think now is the time when the fruits of reform should be passed on to the people and household budgets," Fukuda said in a weekly e-mail magazine released Thursday.

Fukuda, who is facing sagging support rates, is apparently seeking to soothe public disgruntlement over hikes in crude oil and materials prices that are putting pressure on household budgets.

Noting that the economy has undergone a recovery in recent years, with major companies making record profits, Fukuda said, "These are the achievements of various structural reforms and the result of efforts by all of you people who struggled with and endured the pain of the reforms."

Fukuda stressed that pay hikes "will lead to much bigger profits for companies as the economy will expand as a whole if consumption increases through higher wages."

Companies and household budgets are closely connected, he said.

Fukuda told reporters in late January that improvements in labor conditions are a "plus factor" for household budgets and the nation's economic situation.

Labor unions at many leading Japanese auto and electronics makers are expected to secure the same pay hikes as last year as annual labor-management wage negotiations gather steam, according to sources involved in the talks.

Workers at Toyota Motor Corp. are likely to win a record bonus, they added.

Of the unions belonging to the Japan Council of Metalworkers' Unions, those at large electronics makers demanded a pay scale increase of ¥2,000 per month for the third year in a row.

But a large number of manufacturers have adopted a cautious bargaining stance, despite record-setting earnings, citing growing uncertainties over the economic outlook.

Mitsubishi Electric Corp. is set to offer a hike of ¥1,000 to its union, as it did last year.

Labor-management negotiations at Matsushita Electric Industrial Co. and Toshiba Corp. are also focused on basic wage increases of ¥1,000, the same level as last year.

Among other members of the council, which is a 2-million-strong umbrella organization for the manufacturing sector and a trendsetter in annual wage negotiations, the Toyota union is expected to win a record high average yearly bonus of ¥2.53 million, as requested.

But Japan's largest automaker is likely to offer a basic monthly wage increase of ¥1,000, as opposed to the union's demand for ¥1,500, because it believes a large pay scale increase would weaken its international competitiveness.