Japan’s 2025 Spring Labor Union: Rengo Aims for Higher Wage Hikes Amid Economic Challenges
In a recent interview with Reuters, Rengo Chairman Tomoko Yoshino emphasized the need for Japan to achieve “better results than last year” in the 2025 spring labor union negotiations. This annual event,known as shunto,marks a critical moment for labor-management discussions,with a focus on sustaining wage increases of 5% or more annually to ensure real wages remain positive despite price fluctuations.Last year, Japan saw a historic wage increase of 5.1%,the highest in 33 years,driven by labor shortages and rising prices. However, Chairman Yoshino noted that real wages—adjusted for inflation—continue to lag, leaving many workers feeling little improvement in their lives. “There are very few people who actually feel that their lives have improved,” she said.
For 2025, Rengo has set enterprising targets: a wage increase rate of 5% or more for major corporations, with a base increase of 3% or more, and a 6% or more target for small and medium-sized enterprises (SMEs). Yoshino stressed the importance of narrowing the wage gap between large companies and SMEs, notably local businesses, which often struggle to secure funds for wage hikes.
“It’s not going to be resolved so easily. If it had been possible,wages at small and medium-sized enterprises would have been higher. We have no choice but to keep saying this,” she remarked. To address this, Rengo plans to collaborate with the government and business community to improve the habitat for SMEs, ensuring they can pass on appropriate price increases to fund higher wages.
Japan’s economic landscape has been shaped by decades of deflation following the burst of the bubble economy in the 1990s. Since the Shinzo Abe management, the government has prioritized wage growth, leading to gradual increases. However, Yoshino warned that Japan’s wages remain the lowest among developed countries, driving talented young workers overseas.
“Excellent human resources,especially young people,are moving overseas. I think it is indeed very vital here to first raise wages to a global level,” she said. “If we don’t raise this, we will be left behind.”
The 2025 spring labor union negotiations will also focus on stabilizing wages, the economy, and prices to foster consumer confidence. “If people don’t have expectations for the future, they won’t be able to spend much,” Yoshino noted.
| Key Highlights of 2025 Spring Labor Union |
|———————————————–|
| Target Wage increase for Major Companies | 5% or more (base increase of 3% or more) |
| Target Wage Increase for SMEs | 6% or more |
| 2024 Wage Increase Rate | 5.1% (highest in 33 years) |
| Focus Area | Narrowing wage gap between large companies and SMEs |
As Japan navigates these economic challenges, the 2025 spring labor union negotiations will be a pivotal moment in shaping the country’s future. With Rengo’s leadership and collaboration across sectors,the goal is to establish a stable trajectory for wages,the economy,and prices,ensuring a brighter future for japanese workers.Thomson Reuters, a global leader in providing trusted information and insights, has long been synonymous with integrity and reliability. At the heart of its operations lies the “Principles of Trust”, a foundational framework that guides its commitment to delivering accurate, unbiased, and actionable content. These principles are not just a corporate mandate but a reflection of the association’s dedication to fostering trust in an era were misinformation is rampant.
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Interview on JapanS Wage Growth and Economic Challenges
Editor: Yoshino-san, you’ve mentioned that Japan’s wages remain the lowest among developed countries. Why is this such a pressing issue, and what are the long-term consequences if this isn’t addressed?
Yoshino: The low wage levels in Japan are a important concern because they directly impact our ability to retain talented young workers. Many excellent human resources, especially young people, are moving overseas in search of better opportunities.If we don’t raise wages to a global level, we risk being left behind in the global economic competition. This brain drain could have severe long-term consequences for Japan’s economic growth and innovation.
Editor: You’ve also talked about the challenges faced by small and medium-sized enterprises (SMEs) in raising wages. What specific measures are being planned to address this issue?
Yoshino: Rengo plans to collaborate with the government and the business community to improve the environment for SMEs. The goal is to ensure that these enterprises can pass on appropriate price increases to fund higher wages. we are focusing on creating a more supportive habitat for SMEs, which includes policies that allow them to stabilize their operations and increase their profitability. Only then can they afford to raise wages sustainably.
Editor: The 2025 spring labor union negotiations are coming up. What are the key focus areas,and how do you expect these negotiations to impact the broader economy?
Yoshino: The 2025 negotiations will primarily focus on stabilizing wages,the economy,and prices. We aim to foster consumer confidence by ensuring that people have expectations for a better future.If people don’t feel confident about their financial stability, they won’t spend much, which can further slow down economic growth. By achieving a stable trajectory for wages and prices, we hope to create a more positive economic outlook for Japanese workers.
Editor: How does japan’s history of deflation play into the current wage stagnation, and what role has the government played in addressing this issue?
Yoshino: Japan’s economic landscape has been shaped by decades of deflation following the burst of the bubble economy in the 1990s. This deflationary environment has made it challenging for companies to raise wages. However, since the Shinzo Abe governance, the government has prioritized wage growth, leading to gradual increases. While we’ve seen some progress, wages remain low compared to other developed countries. The government’s continued focus on this issue is crucial, but more aggressive measures are needed to achieve significant improvements.
Conclusion: Yoshino-san’s insights highlight the urgent need to address Japan’s wage stagnation, notably for SMEs and young workers. The upcoming 2025 spring labor union negotiations will be pivotal in shaping the country’s economic future. With collaborative efforts from Rengo, the government, and the business community, there is hope for establishing a stable trajectory for wages, prices, and overall economic confidence, ensuring a brighter future for Japanese workers.
