The focus of this year's spring labor union is sustainable wage increases, including for small and medium-sized enterprises, and while 85% of small and medium-sized enterprises plan to raise wages in the new fiscal year, the outlook for the level of wage increases is based on this year's actual results. A private survey found that this is below. Additionally, more than half of the companies that did not raise wages answered that they were not able to pass on the cost increases, highlighting the fact that the difficulty in passing on cost increases is an impediment to raising wages.

The survey was conducted by the private research firm Tokyo Shoko Research over the Internet this month, as spring labor negotiations are in full swing, and responses were received from 3,873 small and medium-sized enterprises across the country.



According to the survey, 85% of small and medium-sized enterprises plan to raise wages in the new fiscal year, the highest rate since fiscal 2016, when regular surveys began.



On the other hand, in terms of wage increase rates,


▽ 2% range is 20%


▽ 3% range is 33%


▽ 4% range is 9%


▽ Wage increase rate of 5% or more as set out in the union's policy is 26%,


11 points lower than this year's result , the median value was also 0.5 points lower than this year.



When we asked the 583 companies that did not implement wage increases for multiple reasons, the most common answer was ``because we have not been able to pass on the increased costs to prices'' (54%), followed by ``soaring prices of raw materials, etc.'' 49% said ``because of this.''



Furthermore, of the companies that responded that their labor costs had increased, 48% said they were not able to pass the increase on to prices.



The focus of this year's spring labor movement is whether sustainable wage increases will be realized, including for small and medium-sized enterprises, but small and medium-sized enterprises have difficulty passing on the rising costs of raw materials and labor, which is hindering wage increases. The reality of the situation has once again come to light.



Mitsuhiro Harada, information manager at Tokyo Shoko Research, said, ``The idea of ​​raising wages has definitely taken hold among small and medium-sized enterprises, but they are unable to secure the funds to raise wages because they have not been able to pass on increases in fuel and labor costs to prices. We can see that.There are many small and medium-sized enterprises that are taking on the cost increases themselves, so we need to think about creating an environment where it is easy to pass on the cost increases on an ongoing basis, rather than relying on temporary momentum.'' .

The challenge is whether the increase in labor costs can be passed on to prices.

As costs such as raw materials and labor costs increase for small and medium-sized enterprises, the issue is how much of the increase in labor costs can be passed on to prices.



When Tokyo Shoko Research asked 2,640 small and medium-sized enterprises across the country about costs such as raw material costs, fuel costs, and labor costs, the majority of small and medium-sized enterprises answered that costs had increased as of January this year compared to the same month of the previous year. This amounted to 74%.



When asked for multiple answers,


91% said ``rising costs for raw materials, fuel, and electricity,'' followed


by


71% for ``personnel costs,''


and 28% for ``impact of the weaker yen.''



Furthermore, when asked whether they were able to pass on some of the increased costs to prices, 63% of companies answered that they were able to pass on some of the increased costs to prices for "raw materials, fuel costs, and electricity costs," while 63% of companies answered that they were able to pass on some of the increased costs to prices. is only 52%, indicating that it is more difficult to pass on labor costs to prices.



Multiple answers were given regarding the reasons


: 50% said ``I am concerned about the impact on business transactions, such as a decrease in orders,''


47% said ``Because I am unable to gain understanding from major business partners,'' ▽ ``Because


other companies in the same industry 39% said "because it is not passed on to the public".

“Creating an environment that makes it easy to pass on prices”

Commenting on the results of this survey, Mitsuhiro Harada, information manager at Tokyo Shoko Research, said, ``The idea of ​​raising wages has definitely taken hold among small and medium-sized enterprises, but the degree to which they can raise wages varies considerably from company to company.Fuel costs and labor costs have increased. "However, we can see that the funds for wage increases cannot be secured because the amount is not being passed on to prices well, or only partially."



``It also sends a message that small and medium-sized enterprises have worked hard to raise wages last year, but they are tired of it.This year, there are companies that are having a hard time raising wages as there is no foreseeable future, including the possibility that negative interest rates will be lifted. Some companies have no choice but to keep their rates low."



He added, ``Up until now, the government has been encouraging wage increases through tax breaks and subsidies, but I think it has reached its limit. We need to think about creating an environment where it is easy to continue passing on prices, rather than relying on strong momentum.''

Passing on prices such as labor costs is the key

This spring, we hear from small and medium-sized enterprises that want to raise wages that the key is whether they can pass on the rise in prices and labor costs to their prices.



Ibaraki Belt Service, located in Mito City, is a company with 10 employees that installs and repairs belt conveyors for approximately 1,500 companies, from large companies to small and medium-sized companies.



The prices of replacement rubber and metal parts used for repairs continue to rise due to the weak yen, and purchasing costs have increased by about 40% from two years ago.



Furthermore, we are working to improve working conditions to alleviate the labor shortage, and last year we raised wages by about 5%, including the base increase, and we hope to achieve a wage increase this year as well.



For this reason, the company is encouraging its business partners to pass on the increase in purchasing costs and the increase in labor costs due to wage increases to the construction price.



However, it is said that it is difficult to pass on all of the cost increases due to concerns that rising construction prices will affect future transactions, and because the business partners do not have the financial capacity to do so.



Even so, we strive to improve our skills and increase our competitiveness by actively conducting training and other activities, and we also strive to build relationships of trust by responding to the requests of our business partners as much as possible.



In addition, the company president personally visits the partner companies and presents documents showing that parts prices have increased, seeking understanding on how to pass the increase on to construction costs.



This week, the president visited a long-time business partner, a quarrying company in Tsuchiura City, Ibaraki Prefecture, that had agreed to the price increase and expressed his gratitude, saying, ``Thank you for your cooperation in passing on the price increase.'' "We will somehow take care of the problem and pass it on to other customers."



In response to the increase in construction prices, President Tetsuo Tsukada of Tsukada Toukan said, ``Although there is some resistance to raising construction prices, the trend in the world is that all goods are going up, and many of the companies we do business with are small and medium-sized enterprises. We have asked for a price increase and they have accepted it, so we will accept the price increase within this cycle.We work together as an indispensable partner, so we value each other, communicate well, and move forward while understanding the situation. I want to,” he said.



A male employee in his 20s at Ibaraki Belt Service said, ``It's a busy workplace where you have to be flexible and respond quickly so as not to stop the customer's production line.If the work environment is good, you can work hard and get a raise. I think it's good," he said.



Akiko Otsuki, president of Ibaraki Belt Service, said, ``It's a painful feeling when telling customers about a price increase, but if we don't pass on the price increase, it will affect the survival of the company.'' ``We are working to add value while valuing a relationship of trust so that people will feel that way.We are working on raising wages because it is related to employee motivation, and we would like to return the increased amount to employees.'' We were talking.

The government also implements various support measures

The government is also implementing various support measures to encourage companies to pass on costs.



[Price Negotiation Handbook]


The Small and Medium Enterprise Agency has created and published a handbook for companies to use when negotiating prices with business partners.



The handbook recommends presenting data on specific changes in raw material and energy prices before negotiations, and sharing data with business partners three to six months in advance of potential price increases. Masu.



[Price Pass-through Support Desk]


We have also set up ``Price Pass-through Support Desks'' in 47 prefectures nationwide to provide knowledge on price negotiations and cost calculation methods.



[Subcontractor G-Men]


Additionally, 300 investigators called "Subcontractor G-Men" have been deployed across the country to check whether large companies are appropriately responding to small and medium-sized enterprises' requests for price pass-through.



[Price Negotiation Guidelines for Labor Costs]


The Fair Trade Commission and other organizations have published guidelines that summarize the actions that are required of both the ordering and ordering parties so that small and medium-sized enterprises can pass on increases in labor costs to prices.



The guidelines state that companies that place orders are required to provide opportunities to regularly discuss price pass-through, even if there is no request from the small and medium-sized enterprises that receive orders.



We also request that suppliers not be treated unfavorably, such as by suspending transactions, because they have been asked to transfer funds.



[Revising the Promotion Standards]


The Small and Medium Enterprise Agency is aiming to revise the "Promotion Standards" that define the business relationship between subcontractors and prime contractors as early as next month.



The standards are expected to include such things as holding discussions to appropriately pass on personnel costs based on the guidelines of the Fair Trade Commission, and aiming to pass on all appropriate cost increases for raw materials and energy.



Although these standards are not legally binding, guidance and advice may be provided by various ministries and agencies.