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Japan's annual wage negotiations that started are being watched closely as an indicator of whether Prime Minister Shinzo Abe's push to end almost two decades of stagnant economic growth and deflation in Japan will succeed.
A year of monetary stimulus and fiscal spending has led to surging corporate profits and Abe wants to translate that into spending power for workers to boost consumption and investment as well as help offset a national sales tax hike from April.
The union representing over 27,400 workers at Nippon Steel asked for an average increase of JPY 3,500 or about 1% in the monthly base salary for unionised workers. The raise would apply for the 2014 and 2015 fiscal years. The company last raised base wages in 2000.
Mr Tadayuki Ohmori head of the union said that "Japan needs to emerge from deflation to be reborn with sustainable growth and what we need is a higher income for all workers to help boost consumption.”
Japan Federation of Basic Industry Workers Unions, an umbrella group that includes unions representing workers in steel and shipbuilding, agreed this week to seek for a minimum one percent base pay rise each of the next two years. Like Nippon Steel, those unions submitted their requests on last Friday.
Other unions representing workers at companies like Toyota Motor Corp and Hitachi Ltd are preparing to demand a pay hike next week. The companies are to reply to the wage proposals by mid March.
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