Toyota accepts union demand for biggest wage hike in 20 years

Gulf Today Report

Toyota Motors agreed to its biggest wage hikes in two decades, in an early sign of momentum in wage gains as the central bank looks for evidence of a wage price cycle that could lead to a policy change.

The company said, on Wednesday, that it agreed to increase salaries, including basic wages and bonuses, in the first round of negotiations, and the deadline for reaching an outcome in the negotiations was not until March.

"This is the third year in a row that the world's largest automaker has fully met union demands," the company added.

Stronger wage growth

Wages were central in Japan, with the Bank of Japan indicating that it must see stronger wage growth to ensure the trend in prices are sustainable.

The Bank of Japan has an inflation target of 2%, but even with a 4% rise in core rates in the economy, the central bank remains committed to its massive stimulus program so that wages also show larger gains.

Toyota said, "The bonuses this year will be equal to 6 months' salary." The company did not provide a breakdown of the percentage increases in wages for workers identified in several categories. The union said, "The wage increase was the largest in 20 years."

The Japanese government selected Kazuo Ueda to take over the presidency of the Bank of Japan in early April, amid raging market speculation that a policy change might follow, a shift that would affect markets around the world.

Haruhiko Kuroda, the current Bank of Japan Governor, noted that "wage growth of 3% is necessary to support inflation stable at 2%." As labour negotiations draw to a close, some of the country's largest companies have announced increases to salaries, base wages and bonuses for the coming year.