CSRDA Discussion Paper Series

No. 62 Union's Effects on Wage Inequality in Japan
Kyoko Suzuki
Kyoko Suzuki The Japan Institute of Labour Policy and Training
Union EffectWage DistributionInequalityGenderWage Policy
Goal 5: Gender EqualityGoal 8: Decent Work and Economic GrowthGoal 10: Reduced Inequalities
The Survey on Work and Life of Workers

There has been no agreed conclusion on the union wage effect in Japan, with most research indicating that there is only a minimal effect. This paper re-evaluates the effect of unions on wage levels and distributions in the Japanese labor market, using surveys conducted by RENGO-RIALS, an affiliation of the largest national trade union center in Japan. The research indicates that most of the observed union wage gap comes from differences in firm size and differences in worker characteristics, especially tenure, between unionized and nonunionized firms, confirming no marginal effect of unions independent from these factors. However, unions exercise their influence by maintaining the wage structure that unions have long advocated, rather than simply increasing the wage level. In unionized firms, wages increase with age/tenure, and the slope of the wage curve becomes steeper after age 40. As for wage distribution, unions do not reduce the overall wage dispersion of male workers within unionized firms but reduce wage inequality within the same age groups. As for female workers, inequality is consistently larger in unionized firms than in nonunionized firms, and the gap has continued to expand in recent years. The results show that unions exert their influence by maintaining the wage structure that they have promoted. While they have been successful in implementing union wage policy, their traditional concept of fairness is challenged.