``We have no choice but to pass on the price increase in raw materials to the selling price.On the other hand, how much should we include labor costs?'' While there is a growing movement to raise
wages
due to labor shortages, small and medium-sized enterprises Some say that it is difficult to pass on prices that include labor costs.
We asked experts about how to raise wages at small and medium-sized enterprises, which is considered the key to creating a virtuous economic cycle in which wages and prices rise stably.
table of contents
Passing on manufacturing costs to prices is almost accepted.
Passing on the wage increase to business partners...
《Expert QA》
Q.
Challenges for raising wages
Q.
What is needed to spread the wage increase movement and make it sustainable?
Open table of contents
table of contents
table of contents
Passing on manufacturing costs to prices is almost accepted.
Passing on the wage increase to business partners...
《Expert QA》
Q.
Challenges for raising wages
Q.
What is needed to spread the wage increase movement and make it sustainable?
Passing on manufacturing costs to prices is almost accepted.
Kojima Textile Industry, located in Sagamihara City, Kanagawa Prefecture, is a company with 12 employees that manufactures industrial strings used in things such as window blinds and sells them to 20 companies, including major companies.
The product's raw materials are chemical fibers made from petroleum, so purchasing prices have increased over the past two years due to Russia's invasion of Ukraine and the weaker yen, and manufacturing costs have increased by about 20%.
In order to pass on costs to sales prices, the company
▼ presents materials to the companies it sells to showing that raw material prices have increased
▼ holds meetings with customers from the product development stage to more than double the durability of the product.
We have continued to make efforts to gain the understanding of our business partners
by developing products that meet their needs, such as by developing improved strings , and we are now able to get them to accept almost any price pass-through.
Passing on the wage increase to business partners...
On the other hand, it is said that it is currently difficult to pass on the increase in personnel costs associated with employee wage increases to sales prices.
The company has been working to raise wages by about 4% for both full-time and part-time employees over the past few years due to labor shortages and rising minimum wages.
A female employee in her 40s said, ``I'm really feeling the rise in prices even when I shop on a daily basis, so if my salary increases, it would help my life.''
However, there are concerns
that it is difficult to clearly show the amount of the wage increase to business partners, and that
if the selling price increases further by passing on the wage increase in addition to the raw material price increase, it may affect future transactions. about it.
For this reason, it is difficult to ask business partners to pass on the entire wage increase to prices, and only a portion of it can be passed on.
SME president: ``In reality, it is difficult to raise wages''
President Satoshi Kojima said, ``If we don't pass on the price of raw materials, it will be the same as a discount, so we have to pass it on because of the livelihoods of our employees.On the other hand, it is difficult to decide how much to include in labor costs. If we continue to make efforts such as creating products with added value that only our company can make, and at the same time pass on the price including labor costs, it will lead to further wage increases and lead to securing new workers, so we see this as a major challenge. I want to think about it," he said.
Regarding this year's spring strikes, he said, ``I don't know yet whether it will lead to an end to deflation, and I think it will be difficult.If consumption increases by raising labor costs and the economy gets going, deflation will gradually improve.'' I think they will, but the truth is that it is difficult to raise wages.In order to overcome deflation, it is necessary to pass on wage increases to small and medium-sized enterprises that are subcontractors to large companies. I want them to create an environment where things can go smoothly."
《Expert QA》
We asked Saisuke Sakai, chief economist at Mizuho Research & Technologies, about the outlook for wage increases and the impact on the Japanese economy.
Q.
This year's spring fighting actually started on the 24th.
how to see focus
A.
Last year saw the highest wage increase in 30 years, and attention is now on whether the high level of wage increases will continue this year, or whether the wage increase will even exceed last year's level.
This year's spring labor trade will be an event to see if there will be a full-fledged change in the wage-setting behavior of companies as the labor shortage worsens.
Q.
From the perspective of the Japanese economy, how do you view this spring labor movement?
A.
This year's spring labor war could be a major turning point for the Japanese economy.
Wage growth has not kept up with price growth, and personal consumption continues to be lackluster.
If this year's spring labor union is able to raise wages at a higher level than last year, there is a high possibility that real wages, which are currently negative, will turn positive.
If wage growth exceeds price growth, more people will be willing to increase their consumption a little more, and the recovery trend in personal consumption will become stronger.
This will make it easier for companies to pass on their prices, leading to expectations that there will be a stronger movement towards breaking away from deflation, where prices continue to fall.
Depending on the trend in wage increases, it may also affect the Bank of Japan's monetary policy decisions, so it is attracting a lot of attention.
Q.
What is the outlook for wage increases in this year's spring labor union?
A.
At present, the wage increase rate for this year's spring labor labor union is expected to be around 3.8%, which is likely to be higher than last year.
The background factors include high levels of corporate profits, tight labor supply and demand, and prolonged inflation.
In addition, there is an atmosphere of positive wage increases among the government, labor, and management.
Some large companies have recently announced higher wage increases than last year, and there is a good chance that the move will spread.
Q.
Challenges for raising wages
A.
Concerns remain as to whether small and medium-sized enterprises are able to secure enough funds to raise wages.
There are also concerns about whether the wage increases will be able to be passed through to prices sufficiently.
Last year, there was a feeling among small and medium-sized enterprises that they had to raise wages socially, and I think many of them gritted their teeth and decided to raise wages, even though it was really difficult, in order to secure human resources. .
The challenge going forward will be how to spread wage increases among small and medium-sized enterprises and make them sustainable.
If wage increases are weak and real wages do not turn positive, the pace of recovery in personal consumption will be slow.
There is a risk that this will lead to a vicious cycle in which strong companies, especially strong companies, will be more likely to lower product prices, and small and medium-sized enterprises that cannot pass on the price increases will be unable to raise wages.
Q.
What is needed to spread the wage increase movement and make it sustainable?
A.
First of all, companies need to increase sales in order to fund wage increases.
It is also important for the government to support efforts by companies to differentiate their products and services.
Measures to revitalize the labor market by moving workers to growth fields and raising wages will also be a major point of contention.
It is also important for society as a whole to create an atmosphere in which it is natural for wages to rise, and that it is natural for wages to rise to a certain extent to be passed on to prices.