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Survey of Top Management Regarding the 2003 Spring Labor-Management Negotiations

Summary of Results

August 21, 2003

Nippon Keidanren
(Japan Business Federation)

Results of this year's wage-setting discussions

As a result of wage-setting decisions made in this year's labor-management negotiations, one out of every two companies (50.1%) did not raise its base wage and implemented annual wage increment only. Moreover, 16.8% of the companies indicated that they went further with belt-tightening decisions, offering partially reduced annual increment only (8.6%), implementing neither base wage hikes nor annual increment (no wage changes, 5.0%), postponing the timing of fixed annual increment (1.6%), temporarily reducing the base wage (1.4%), or permanently reducing the base wage (0.2%).
In contrast, 4.8% implemented both the base wage increase and the annual increment, and 17.4% indicated that while they do not make distinctions between the base wage increase and annual increment, they raised their wages.

Other results of wage negotiations, and measures implemented

Looking at other results of this year's labor-management negotiations, 40.7% (this and following figures reflect multiple responses) of the companies abolished or revamped their system of annual increment (or continued deliberations aimed in this direction), marking this as the most widely reported decision this year. In addition, a total of nearly one in every four companies gave responses indicating that they stalled or cut back wages for managers, with 13.9% freezing and 10.2% reducing those wages. Firms that lowered the per-employee outlay of bonuses from the preceding year outnumbered those that raised these disbursements by a response ratio of 35.4% to 13.4%. Moreover, 23.1% reported that they introduced (or continued discussing implementation of) bonus systems linked with both employee and company performance.
Other widely selected responses include revision (or continued discussion regarding revision) of systems for lump-sum retirement payments and annuities (32.9%), abolishment or reduction of various allowances (15.7%), and reduction of non-statutory employee welfare benefits (15.7%).

Wage-setting for the future

Top management's perception of the way that wage-setting should be conducted in the future was revealed as follows. Only 0.6% of the firms responded that they should maintain a combined system of annual wage increment and base wage increases, while 60.6% felt that they should discontinue annual wage increment and shift to a system based on performance that would include wage cuts for substandard performers. Moreover, 25.5% indicated that they would like to convert to a system of annual wage increment only (without base wage hikes) and partially base bonuses on worker and company performance in bonuses, and 6.7% signaled the desire to focus on annual increment while implementing base wage increases on an as-needed basis. Including the firms that wish to abandon annual increment, more than 90% of the companies indicated that they are considering overhauling the combined system of annual wage increment and base wage increases.

Employment issues

Of the companies reporting that employment issues were raised in this year's labor-management negotiations (36.0%), 52.3% (18.8% of all respondents) indicated that wage hikes were repressed in favor of sustained employment in the future. In addition, 10.2% (3.7% of total) responded that wages were trimmed down in order to sustain employment, and thus job security was given precedence at more than 60% of the firms that discussed employment issues in negotiations with labor.
Turning to the modes of employment, most companies reported that they employ primarily long-term workers, but will increase the proportion of part-timers and temporary workers (57.2%), followed by firms that will continue to use mostly long-term employees (26.9%), and firms that will retain a minority workforce of long-term employees to run their core operations, but switch to part-timers and temporary workers as much as possible for other duties (13.5%).

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