Japan’s largest companies agreed to substantial pay increases for workers in annual wage negotiations, with Toyota approving raises as high as 28,440 yen per month.
The sizable hikes, exceeding union demands of 5.85% and marking the largest in 25 years for Toyota, heighten expectations that the Bank of Japan will end its negative interest rate policy next week as inflation rises.
“We’re seeing strong momentum for wage hikes,” Japan’s government spokesperson and chief cabinet secretary, Yoshimasa Hayashi, stated. “It’s important that the strong wage hike momentum will spread to small and mid-sized firms.”
While top firms face pressure to facilitate wage growth at suppliers and smaller companies, experts say the sustainability of strong wage growth and its spread remain uncertain.
“Still, the sustainability of such strong pay raises and whether the trend of wage hikes will spread to small and medium-sized companies going forward is uncertain,” senior economist Hisashi Yamada said.
“The Japanese are finally starting to realise that the gap between wages inside and outside the country is widening significantly,” JAM Chairman Katahiro Yasukochi said.
The results are seen as critical to the central bank’s decision on monetary policy and the government’s goal of reversing years of stagnant real wage growth to boost the economy.
“We do hope that our results could spread to all of our suppliers,” Toyota’s chief human resources officer, Takanori Azuma, stated.
“We need to continue asking tier-one suppliers to pass that down to tier-two suppliers and so on,” he said.
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