Japan's Labor Union Calls for Action Against Inflation Amid Economic Concerns

Japan's largest labor union, Rengo, has issued an urgent call for government action against inflation, emphasizing the direct impact on workers' living standards and overall economic growth. The union's president, Tomoko Yoshino, stated that rising prices are severely affecting households, particularly the most vulnerable, and urged for immediate measures to alleviate the financial burden on families.

Rengo's concerns come amid growing anxiety over the rising cost of living, which has been exacerbated by persistent inflation rates. Recent data indicates that Japan's consumer prices rose by 3.1% year-on-year in September 2023, the highest level in over three decades.

This inflationary trend has sparked fears of a potential wage-price spiral, where increasing prices lead to demands for higher wages, in turn fueling further inflation. Rengo is advocating for wage increases that exceed inflation, aiming to restore purchasing power for Japanese workers.

The union's call for action aligns with broader concerns about Japan's economic stability, particularly as the country grapples with an ageing population and a declining birth rate, which could hinder future economic growth.

The European Bank for Reconstruction and Development reported that ageing populations are already hindering economic growth in many nations, projecting a reduction in annual per capita GDP growth by an average of almost 0.4 percentage points a year between 2024 and 2050 in emerging Europe.

Beata Javorcik, chief economist at EBRD, highlighted that post-communist nations are facing the challenge of ageing before achieving significant wealth, with a median age of 37 years and a GDP per capita of around $10,000, significantly lower than that of their advanced economy counterparts in the 1990s.

The EBRD report also noted that demographic changes are eroding living standards, necessitating a shift in public discourse regarding retirement age and labor participation, especially for older workers.

Rengo's call for increased wages in the face of inflation is a critical step towards safeguarding economic stability and protecting the livelihoods of workers in Japan. The convergence of these challenges—rising inflation, an ageing population, and stagnant wages—places immense pressure on policymakers to act decisively to ensure sustainable economic growth and social stability in the years ahead.