2024 Spring Labor: Asking 100 Large Companies What about wage increases? Will we overcome deflation? February 6th 16:55

Negotiations for this year's spring labor movement have begun in earnest from the middle of this month. We are entering an important phase that will determine the future of the Japanese economy.

What is your policy for wage increases?

Will we be able to completely escape from deflation?

What emerged from a survey of 100 major domestic companies.

(Economy Department reporting team)

The decision to break out of deflation is divided.

NHK conducted a survey of 100 major domestic companies from December 20th to January 15th last year, and received responses from all companies.

When asked about the current state of the Japanese economy, whether they thought it had broken out of deflation, or a situation in which prices continue to fall, 21 companies said they had broken out of deflation, and 36 companies said they had not. We were separated. In addition, 26 companies said ``I don't know'' and 17 companies said ``No response.''

When we asked companies that answered "we have broken free" from multiple answers why, 13 companies said "prices continue to rise by more than 2%, which is the Bank of Japan's target," and 13 companies answered "there is a low possibility of a return to deflation." Six companies responded that wages were increasing sufficiently in line with price increases, and three companies responded that wages were increasing sufficiently in line with price increases.

On the other hand, when we asked companies that answered "we have not overcome deflation" to give multiple answers as to why, 28 companies said "wage increases have not kept up with the rise in prices," and 11 companies said "it's because of bad inflation due to high costs." 7 companies said ``Prices are rising, but the economy is not doing well,'' and 4 companies said ``There is a possibility of a return to deflation.''

Changes in awareness regarding price pass-through

We interviewed major companies that responded that they had overcome deflation.

Iris Ohyama, a household goods manufacturer headquartered in Sendai City, plans to raise wages by approximately 5% in April, including regular salary increases and base increases.

The base has increased for 5 consecutive years.

One of the reasons why Japan is considered to have ``escaped from deflation'' is that wages have increased due to the severe labor shortage.

Chairman Kentaro Oyama

: ``Not only large companies but also small and medium-sized enterprises are forced to raise wages due to the environmental factor of labor shortages.Even if they lack profitability, they cannot hire people unless they raise wages.Even within their own companies, the demographic structure is changing. We want to hire more young employees as things change.”

Factors such as the weaker yen have increased the prices of imported resources and food, and changes in companies' and consumers' awareness of price pass-through are also reasons why they said they have ``escaped deflation.''

Chairman Kentaro Oyama

: ``There was a fear that if we raised prices, we would lose market share,'' but now that wage increases have spread across industries, there is less fear of losing market share, making it easier to raise prices. It has become an environment.”

On the other hand, in terms of the company's and group's businesses, sales are declining in the main home appliance business.

For this reason, the company plans to strengthen its business in growth fields such as the production and sale of packaged rice, whose exports are increasing, and robot vacuum cleaners, where demand for corporate use is expected to increase due to a labor shortage.

Chairman Oyama stated that the future challenge is for the movement to raise wages to spread to a wider range of people, including those working in non-regular employment, and added, ``When wages go to people who originally want to spend, consumption increases by that amount. "As a manufacturing company, I think this is a positive aspect for the future. The mood of consuming appropriately while receiving appropriate wages is gradually spreading."

Saving-minded, wage increase essential

On the other hand, companies that answered that they have not overcome deflation gave reasons for this, including consumers' deep-rooted desire to save money, as well as ``We are at a good opportunity to overcome deflation, but we will continue to monitor trends in prices and wages, including the spring labor movement, for a while.'' "I want to do it," I heard.

Skylark Holdings, a major family restaurant company

: ``Although we are not in the midst of deflation, we cannot say that we have escaped. Raising wages and changing prices appropriately are essential for a virtuous economic cycle.''

At the restaurants it operates, they aim to increase the number of customers and the average spend per customer by improving the menu structure, such as by expanding the small plate menu to encourage additional orders.

Wage increase policy increased from last year

Additionally, in a survey of 100 companies, we asked whether they would raise wages this year.

18 companies said they would ``increase'' and 27 companies said ``it is likely that they will raise it.'' A total of 45 companies were positive about raising their prices, an increase from 42 companies in the previous survey one year ago.

When we asked the 45 companies that answered that they would "raise" or "likely to raise" their wage levels, 14 said it would be "more than the previous year," 9 said it would be "same as last year," and 9 said they were "considering it." There are now 21 companies.

With the exception of those who are "under consideration," most respondents said they would either "exceed last year's figure" or "stay at the same level as last year," indicating that the momentum of wage increases is expected to be maintained to a certain degree.

67 companies “implementing price pass-through”

When asked about their progress in passing on the price of their services and products over the past year, 9 companies answered that they had passed on the price to a sufficient extent, and 58 companies said they had passed on the price to a certain extent. A total of 67 companies responded that they were implementing "price pass-through."

Furthermore, when we asked ``Have you accepted price increase requests from your business partners in the past year?'', 40 companies answered ``Yes,'' and 35 companies answered ``Partly.'' In total, there were 75 companies.

72 companies with “expansion” in economic outlook

When asked about the outlook for the domestic economy this year, one company said it would "expand" and 71 companies said it would "expand moderately," for a total of 72 companies.

In the survey a year ago, 2 companies responded that they were "expanding" and 54 companies responded that they were "expanding moderately," an increase of 16 companies this time.

When we asked companies that answered "expansion" or "moderate expansion" for multiple reasons, 58 companies said "recovery in personal consumption," 46 companies said "recovery in inbound consumption," and 46 companies said "increase in capital investment." There are 43 companies, etc.

Additionally, 33 companies responded that wages would increase, a significant increase from 7 companies in the survey a year ago.

In response to last year's spring labor union, which resulted in the wage increase rate reaching the highest level in 30 years, an increasing number of companies appear to be believing that ``increases in wages'' are linked to economic expansion.

On the other hand, regarding the impact of the Noto Peninsula earthquake on the future economy, some companies said they would "continue to monitor the situation" and others said, "We are concerned that the impact on tourism and service industries in the Hokuriku region will be prolonged. Some companies responded, "Yes."

This year's spring labor union is a "major milestone for the Japanese economy"

We asked Saisuke Sakai, chief economist at Mizuho Research & Technologies, about the challenges facing the Japanese economy.

Q. How do you position this year's spring labor movement?

This could be a major turning point for the Japanese economy.

If wages can be raised at a higher level than last year, there is a high possibility that real wages, which are currently negative, will become 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 are the challenges for raising wages?

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?

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.

(Broadcast on “Good Morning Japan” on January 24th)

100 companies that responded to the survey in alphabetical order

IHI, Iris Ohyama, Asahi Kasei, Asahi Group Holdings, Ajinomoto, Aeon, Isuzu Motors, Itochu Corporation, Internet Initiative, AGC, ANA Holdings, SG Holdings, ENEOS Holdings, Oji Holdings, Osaka Gas, Kao, Kajima Construction, Kawasaki Heavy Industries, Canon , Kyocera, Kirin Holdings, KDDI, Komatsu Ltd., CyberAgent, Suntory Holdings, JFE Holdings, JTB, J.Front Retailing, Shionogi & Co., Shiseido, Shimizu Corporation, Mitsui O.S.K. Lines, Skylark Holdings, Suzuki, SUBARU, Sumitomo Chemical, Sumitomo Metals Mining, Sumitomo Corporation, Sumitomo Electric Industries, Seibu Holdings, Seven & i Holdings, Zensho Holdings, Daiwa Securities Group Headquarters, Chubu Electric Power, Tsuruha, TSI Holdings, DeNA, Denso, Central Japan Railway, Tokyo Electron, Tokyo Kaiyo Holdings, Tokyo Gas, Tokyo Electric Power Company Holdings, Toshiba, Toray, TOPPAN Holdings, Toyota Motors, Nissan Motors, Nippon Paper Industries, Nippon Steel, NEC, Nippon Telegraph and Telephone, Nidek, Japan Airlines, Nippon Life Insurance, Nintendo, Nomura Holdings, Hakuhodo DY Holdings, Panasonic Holdings, East Japan Railway Company, Hitachi Construction Machinery, Hitachi, Ltd., Bic Camera, BIPROGY, Fujitsu, Fujifilm Holdings, Bridgestone, Mazda, Marubeni, Mizuho Financial Group, Sumitomo Mitsui Financial Group, Mitsui Fudosan, Mitsukoshi Isetan Holdings, Mitsubishi Chemical Group, Mitsubishi Motors, Mitsubishi Heavy Industries, Mitsubishi Corporation, Mitsubishi Electric, Mitsubishi UFJ Financial Group, Murata Manufacturing, Meiji, Mercari, Mos Food Service, Yamato Holdings, Yamaha Motor, Unicharm, LINE Yahoo, Rakuten Group, Recruit Holdings, Lawson