Analysis-As inflation bites, Japan's PM finds unlikely ally in labour unions

TOKYO : As Japan faces its first major battle with inflation in decades, Prime Minister Fumio Kishida is extending a rare olive branch to labour unions, who he sees as crucial to his wider push to boost household wealth.

In January, Kishida became the first premier in almost a decade to attend a new year party held by Rengo, the main umbrella union, in a rare gesture to organised labour by the head of the pro-business Liberal Democratic Party. Now, however, conditions for higher wages appear to be falling into place in ways never seen in deflation-prone Japan.

"It's true some of Kishida's proposals mesh with ours," such as steps to narrow income disparity, said Hiroya Nakai, an executive at Japanese Association of Metal, Machinery and Manufacturing Workers - a union for small manufacturers.The relationship between Kishida and unions contrasts with that of many other countries, where governments see current demands for wage hikes as a risk that could trigger unwelcome inflation.

"Japan's job market is diversifying, raising questions about the relevance of labour unions," said Kotaro Tsuru, a professor at Keio University."If they cling to their traditional focus on protecting permanent workers' jobs, their fate is sealed."

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