As Japan steps up calls for businesses to hike pay, the world’s biggest automaker Toyota said that it would accept a union demand for the biggest base salary increase in 20 years and a rise in bonus payments.
Currently in the “Land of rising sun”, the labour talks are in full swing at major companies. Toyota is the epicentre, being one of Japan’s biggest employers.
Many are expected to conclude swiftly as the government seeks inflation-beating wage hikes to ease burdens on consumers.
Rival Honda Motor Co Ltd too acted in accordance with this and acquiesced the to union demands for a 5% pay increase.
In what is the biggest jump since at least 1990, average monthly base salary has risen to 12,500 yen ($92.70) at Honda.
Highest Rise in Base Pay in Two Decades: Toyota
Union representing 357,000 Toyota group workers as well as the company itself, though both declined to reveal the exact number, said that it was the biggest rise in base pay in two decades.
With inflation running at around 4% – the highest level in 40 years following decades of deflation – Japan is under more pressure than ever before to raise wages to revive consumption.
But with the economy struggling – it averted recession in the fourth quarter but grew much less than expected – analysts say pay increases will remain limited to big firms, such as Toyota.
Small and medium-sized companies, which employ most Japanese workers, will struggle to afford pay rises, they say.
Toyota said its wage increase would also apply to part-time workers and senior contract workers and it had agreed to union’s request for one-off bonus payments worth 6.7 months of wages.
Takaaki Sakagami, deputy secretary-general of the Federation of All Toyota Workers’ Union, said the union was pleased it had been able to reach a deal with the company quickly.
The companies have been directed by the Prime Minister Fumio Kishida to increase the wage increases as failing to do so might cause the stagflation to return if pay rises fall short. In the lower house budget committee session he said that “We will boost consumption and expand domestic demand by promoting efforts toward structural wage increases”.
Uniqlo & Nintendo Also Increase the Base Pay
Fast Retailing Co Ltd which owns clothing giant Uniqlo, last month said it would boost pay by up to 40%, fuelling expectations big manufacturers would offer more at annual wage talks with unions this spring.
Video game maker Nintendo Co Ltd said earlier this month that it planned to lift workers’ base pay by 10%, despite trimming its full-year profit forecast.
