Japan's Labor Union Calls for Government Action on Inflation

Tomoko Yoshino, chair of the Japanese Trade Union Confederation (Rengo), has urged Prime Minister Sanae Takaichi’s government to take stronger measures against inflation, which has been outpacing wage growth in Japan. In an interview, Yoshino highlighted the ongoing rise in prices, exacerbated by a weak yen, which increases import costs. She expressed a desire for the government to stabilize inflation around 2%, contrasting with the current rate of approximately 3-4%. This call for action comes as real wages have declined for nine consecutive months, despite Rengo negotiating its most significant wage increases in 34 years for its members, who represent about 10% of Japan's labor force.

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Rengo is set to negotiate wage increases in March, aiming for at least a 5% rise, with a target of 6% or more for small and mid-sized firms to address pay disparities. Last year, Rengo-affiliated workers achieved an average wage increase of 5.25%. Yoshino noted that while overall wage growth has been robust, many sectors, particularly the auto industry, continue to face challenges. The outcomes of these negotiations are expected to influence the Bank of Japan's (BOJ) monetary policy, with market observers anticipating potential interest rate hikes in response to evolving wage expectations.

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In response to the inflationary pressures, Takaichi recently unveiled an economic package that includes measures aimed at increasing wages and alleviating the financial burden on households. During a three-party meeting with Yoshino and Yoshinobu Tsutsui, head of the Keidanren business lobby, Takaichi emphasized the importance of ensuring that wage increases outpace inflation. Yoshino plans to advocate for continued wage hikes exceeding 5% during the upcoming negotiations, highlighting the need for price relief and investment assistance to support smaller firms.

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Yoshino also addressed the impact of U.S. tariffs on Japanese exports, which have contributed to economic uncertainty. A survey by Teikoku Databank indicated that about one-third of companies expect lower profits in fiscal year 2025 due to increased U.S. duties. Yoshino remarked on the challenges posed by these tariffs, stating, “Trump’s tariffs create a lot of uncertainty across industries and are definitely a cause for concern.” She emphasized that stabilizing wages and prices is crucial for reviving Japan's domestic economy.

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In her discussions, Yoshino has underscored the necessity of addressing wage stagnation, particularly in regional areas where traditional gender roles persist, impacting women's employment opportunities. Takaichi acknowledged the importance of these regional talks, confirming their continuation to better understand the structural issues affecting pay outside urban centers.

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• “Prices keep rising, and with the yen this weak, import costs could go up even further,” — Tomoko Yoshino, Chair of Rengo

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• “Making sure base pay gains are above inflation is particularly important.” — Sanae Takaichi, Prime Minister of Japan

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• “But to revive the domestic economy, we need to put wages and prices on a stable path.” — Tomoko Yoshino, Chair of Rengo

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This ongoing dialogue between labor unions and the government reflects the critical intersection of wage policy, inflation control, and economic stability in Japan.

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