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Government Seeks to Spur Imports by Boosting Workers' Purchasing Power Japan Joins Unions in Push for Pay Hikes

April 07, 1986|SAM JAMESON | Times Staff Writer

TOKYO — Trade friction between Japan and the Unites States has created an unusual alliance this year for the annual "spring labor offensive" here.

The government of Prime Minister Yasuhiro Nakasone has joined the labor unions in citing Japan's massive trade surplus as a reason for increasing wages--creating more consumer purchasing power and thus bringing in more foreign goods.

"I want enterprises that can afford to do so to give high wage increases," Nakasone declared in Parliament.

Michio Watanabe, the minister of international trade and industry, went a step further and invited in officials of the four largest labor federations for an informal conversation last Wednesday. No minister of international trade and industry had ever met with labor leaders before and the fact that Watanabe chose to do it on the eve of labor's biggest push gave added significance to the move.

He raised no protest when the labor leaders argued that shorter working hours and an increase in disposable income--to be achieved through higher wages and an income tax cut--are needed "to dissolve overseas economic friction."

The United States has been arguing that Japan must find ways to increase domestic consumer spending because that would mean greater expenditures by the Japanese on imported goods and that, in turn, would mean that the huge U.S. trade deficit with Japan might be reduced.

The overall results of the annual campaign for higher wages will not be known until mid-summer, but some important labor settlements are expected in the days just ahead.

Last December, the government's Economic Policy Council declared that the fruits of Japan's economic success "must be passed on to workers in the form of higher wages and shorter working hours to increase disposable income."

Other Recommendations

Nakasone's Advisory Commission for Economic Structural Adjustment for International Harmony has also recommended higher wage increases to spur consumer spending. And it urged employers to adopt the five-day week and let their workers take extended vacations.

The newspaper Asahi, urging workers to press for shorter hours as well as for higher wages, said in an editorial that "Japan's life style must be reconsidered in all aspects from the standpoint of the trade imbalance."

The Ministry of International Trade estimates that extending the five-day week to all workers--only 27% of the labor force now works only five days a week--would increase consumer spending by 3 trillion yen a year ($17.1 billion).

Even Noboru Goto, chairman of the Japan Chamber of Commerce and president of the Tobu Railway Corp., has come down on the workers' side. He said recently that wages have not kept up with gains in productivity in recent years, and that employers should make up the difference this year.

Goto's statement spurred a storm of protest from the Federation of Employers Assns. Yet Goto, a confidant of Prime Minister Nakasone, was not deterred. He repeated his statement.

Unions are seeking a pay raise of 7%, a target described as preposterous by Bunpei Otsuki, chairman of the employers' federation. Otsuki insists that increases should not exceed 3%, or be held to the level of increased productivity.

In recent years, labor has failed to win even that much in higher wages. In February, the Industrial Structural Council of the Ministry of International Trade and Industry reported that "wage increases, compared with gains in labor productivity, have been low."

And in fiscal 1983, real wages, after being adjusted for the effects of inflation, rose only 0.6%, while productivity went up 2.4%. In fiscal 1984, real wages went up 1.5%, while productivity rose 4%.

In the past five years, productivity in manufacturing has improved 25%, while real wages have grown by only 11%.

Although wage increases last year for workers at major companies averaged 5.03%, wages overall rose by only 3.2%, the Labor Ministry said. It was the lowest rate of increase since 1964, when the ministry started keeping statistics.

Business executives, who traditionally complain of severe conditions as the labor offensive approaches, have armed themselves with a new argument this year. The recent steep appreciation of the yen, which increases the price--thus decreasing the attractiveness--of Japanese products sold overseas, will cut deeply into profits, they say. Some executives have gone so far as to cut their own salaries.

Executives' Pay Cut

Executives at Nissan Motor reduced their salaries last month by 10%, for example, and four steel firms--Nippon Steel, Nippon Kokan, Kobe Steel and Sumitomo Metals--have also announced cuts in executive pay, ranging from 8% to 20%. Noritake, Japan's leading maker of chinaware, cut executive salaries by up to 10%.

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