TOKYO, Jan 16 (Reuters) - Japan's biggest business lobby Keidanren is set on Tuesday to call on its members, including many top blue chip companies, to raise workers' pay to ease the pain of rising living costs and put a decisive end to deflation.
What's at stake for this year's wage talks is the outlook on the Bank of Japan's (BOJ) monetary easing, namely negative interest rates, which can be phased out once wage hikes and inflation are sustainable, analysts say
Whether wage hikes and inflation take hold will depend on the pace and the extent of pay rises through annual wage talks between major firms and trade unions, to be concluded in mid-March, they say.
There is speculation the BOJ could ditch its negative interest rate policy as early as this month, once the spring wage talks show signs of acceleration in wage growth, which are a prerequisite for achieving its 2% price target.
The business lobby's demand stipulates its basic stance on management and labour policy as it kicks off its annual spring wage talks with Rengo, Japan's largest labour unionists' group.
At the talks later this month, Keidanren chief Masakazu Tokura will explain the business lobby's resolve to achieve sustainable wage hikes, officials say.
Small firms that employ seven out of 10 employees and hold the key to wage talks tend to enter their labour talks with management after big firms wrap up their own negotiations in March.
Prime Minister Fumio Kishida, BOJ Governor Kazuo Ueda, Keidanren chief Tokura and Rengo head Tomoko Yoshino, are on the same page, seeking pay raises that exceed the previous year's 3.6%, which was the highest in three decades.
Conditions for wage hikes that beat inflation appear to be in place at large firms, some of whom have said they intend to implement big salary hikes, though plans at small firms will only be known around mid-year.
Small firms tend to operate on thin margins but many of them also face a labour crunch, a result of Japan's ageing population, so they have no choice but raise wages to lure talent, analysts say.
The jobless rate stood at 2.5% in November, edging closer to levels last seen during the early 1990s when the asset bubble burst. Job availability was at 1.28 in November, meaning there were nearly 1.3 jobs per job seeker, labour ministry data showed.
While companies hoarded 343 trillion yen ($2.4 trillion) in cash and savings at the end of September, the ratio of wages to profits remained relatively low, with still room to boost labour costs, analysts say.
Tuesday's report by Keidanren will be followed by a labour and management forum next week, which will kick-start the labour talks in earnest, with speeches by Tokura and Yoshino, who will underline their resolve to seek higher wages. ($1 = 145.7800 yen) (Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong)
