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Results of 2005 Spring Labor-Management Negotiations

June 8, 2005

Nippon Keidanren
(Japan Business Federation)

The average amount of the wage increases agreed at 141 large enterprises was ¥5,504 per month (weighted average), up 1.67 percent, from the previous year, which remained mostly unchanged in comparison with the last year's result.

In December 2004, Nippon Keidanren issued a report, "Committee on Management and Labor Policy 2005", which indicated a basic stance of the management side for 2005 spring labor-management negotiations. This report presented recognition of the environment to the negotiations as follows:

  1. It is important for companies to set wages in accordance with their ability to pay, based on value-added productivity (value-added created by an employee).

  2. Enterprises will have to bear increasingly heavy outlays for social security expenses and so on due to aging of the society, and wages must be determined within the framework of controlling total labor costs.

  3. Given tough international competition and uncertain prospect for business performance, raising wages, already high by international standards, any further is not a realistic option.

On that basis, Nippon Keidanren indicated the following basic stances for the wage negotiations for this year:

  1. With wages increasingly being administered on an individual employee basis in enterprises, a base wage increase in the sense of a yearly uniform base wage increase on the wage curve for all employees no longer performs in any meaningful way.

  2. Short-term business performance should be reflected in bonuses.

Following these lines, management sides have individually sat in their labor-management negotiations. In the result, most agreed to offer annual increment alone without base wage increase, i.e. maintaining the wage curve. Mainly for enterprises with favorable performance, short-term business performance has been reflected in bonus. This trend observed for the past few years is considered to have taken root in the spring negotiations.

Results of 2005 Spring Wage Raise Negotiations <PDF>

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