Japan labor boss less keen than PM Abe is on wage hikes

TOKYO (Reuters) - Japan’s labor unions are less aggressive in pressing companies for pay raises than Prime Minister Shinzo Abe is, the nation’s top labor leader said, a further sign of trouble for the government’s efforts to pull the economy out of deflation.

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Rikio Kozu, president of the Japanese Trade Union Confederation, told Reuters on Wednesday that unions should prioritize wage hikes that are sustainable, suggesting Abe’s push is unrealistic.

The head of the federation, known as Rengo, also questioned Abe’s aim of expanding the economy by one-fifth to 600 trillion yen ($5.07 trillion) in five years, calling the plan “nothing but pie in the sky”.

The premier has piled pressure on companies to raise wages in a bid to pull Japan out of two decades of deflation and stagnation.

But many firms have resisted his calls for higher pay due to uncertainty at a time when China’s slowing growth raises fears of deepening global slowdown and financial market turmoil.

“I hear government officials saying labor unions should demand higher wages but I’m skeptical of such a viewpoint,” Kozu said. “If making stronger demand raises the standard of every worker’s income, we would raise our demand more.”

Rengo seeks a base pay raise of about 2 percent, less than the 3 percent Abe sees needed to meet the growth target. The 2 percent demand is more realistic and helps nurture the atmosphere that wage hikes would be sustained, Kozu said.

Japan’s leading blue-chip companies agreed in 2014 to an average wage hike of 2.19 percent and they consented last year to a 17-year high of 2.38 percent.

But including part-timers and employees at small firms that employ seven out of 10 workers, overall per-capita wage growth hovers far below 1 percent, underscoring the challenge of spreading the trickle-down of Abenomics.

Rengo and the biggest business lobby, Keidanren, begin annual wage negotiations this month. Japan’s major firms announce wage plans in March.

Policymakers are watching how much companies raise wages through the annual negotiations. A disappointing result could dampen Abe’s aim to boost consumption and further jeopardize the Bank of Japan’s 2 percent inflation target.

Toyota Motor Corp’s union, Japan’s biggest, plans to seek a third consecutive increase in monthly base pay, but just by 3,000 yen - half the amount it sought last year, domestic media reported.

Bellwether Toyota’s move sets the tone in the annual wage negotiations across broader sectors.

Reporting by Tetsushi Kajimoto; Editing by William Mallard and Richard Borsuk