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"Survey of Top Management on Spring Labor-Management Negotiations" for 2004

Summary of Results

August 25, 2004

Nippon Keidanren
(Japan Business Federation)

According to the survey, more than half of the companies surveyed indicated that they were offering only annual increment, while one third said that they had eliminated or overhauled their annual increment systems, or were considering taking such action. For the first time ever, the survey asked companies about their efforts related to employment for seniors, discovering that as much as 80% of the respondents have some form of a system to maintain employment for workers aged 60 and older.

In this annual survey, the leaders of Nippon Keidanren and Tokyo Employers' Association member companies are asked to respond to a questionnaire on their spring Labor-Management negotiations. There were 545 respondents to this year's survey.

1. Wage Settlements for Fiscal 2004

Regarding wages for non-management workers, 54.3% of the respondents indicated that they were offering annual increment alone without base wage increase. This was the second year in a row that more than half of the respondents reported making this decision (50.1 % last year). In addition, 4.6% reported that they reduced some annual increment levels and 5.0% answered that were not offering base wage hikes nor annual increment, together representing approximately 10% of the total. No company reported implementing pay cuts.

In contrast, 3.9% indicated that they implemented both base wage increase and annual increment, while 19.2% said that they do not make a distinction between base wage increases and annual increment, but implemented some other form of wage enhancement.

2. Other Results and Actions

One third (33%) eliminated or overhauled their annual increment, or considered doing so. With respect to managerial salaries, 8.7% kept salaries at the same level and 6.3% instituted cuts, with both figures dropping from last year's ratios (13.9% and 10.2%, respectively).

On a per-employee basis, companies that raised their bonus payments over last year's levels outnumbered those that lowered these payouts, by 23.9% to 18.9%. Moreover, 28.3% indicated that they adopted or were considering adopting performance-based bonus payment systems, an increase of 5.2 points over last year's survey result.

3. Future Wage Plans

A majority of the respondents (56.9%) reported that they wanted to replace their annual increment programs with a system that would be based on worker and company performance and include pay cuts. In addition, there is a growing desire to use bonuses as the sole medium for rewarding performance and accomplishments, as 30.4% stated that they would like to limit wage increases to only the annual increment and reflect achievements and performance in bonuses.

4. Employment Issues

Nearly one fourth of the respondents (24.5%) said that employment-related issues were brought up during the Labor-Management negotiations, a decline of 11.5 points from last year's result. The methods that those respondents most commonly used to deal with the issues were to suppress wage hikes in favor of preserving employment for the future (8.8%), and to handle employment and wages as separate issues (also 8.8%).

As for plans regarding the future composition of their workforces, 52% of the respondents, the largest ratio, indicated that they would use mainly regular workers but increase the proportion of part-timers and temps. Companies that plan to continue using regular workers as the bulk of their workforce accounted for 29.2%, up from last year's 26.9%.

5. Employment of Older Workers

As much as 80.0% of the respondents reported that they had some form of system to maintain employment for workers aged 60 and older. Of these respondents, 65.8% said that workers who have reached retirement age (60) are retained only if approved by the company, while 10.7% indicated that their system offers extended employment to all workers those who wanted. Companies that set their retirement age above 60 accounted for 3.3% of all respondents, while 0.2% do not set any retirement age.

The oldest worker age at the companies with mandatory retirement or over-60 extended employment systems was 65 for nearly half of the respondents (45.5%), followed by 62 (29.6%) and 63 (18.1%).

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