Toyota accepts union demands for biggest wage hike in 20 years

Renowned automaker, Toyota Motor has accepted the union demand for biggest base salary increase in two decades and a raise in bonus payments, in line with Japan’s stepping up hike pay, it statement said on Wednesday.

Being Japan’s biggest employers, Toyota has been a frontrunner for the spring labour talks growing in major companies, which are the government’s way to seek wage hikes to ease burdens on consumers facing inflation impacts.

Japan is under more pressure to raise wages, with inflation reaching highest recorded level in 40 years at four percent. The pay incline will be limited to big firms, as small and medium-sized companies, which employ most Japanese workers, would struggle to increase wages.

The automaker’s decision to accept union demands at the first round of talks is meant for Toyota as well as the whole industry, which will be a gateway to holding discussions between labor and management at companies, said incoming president, Koji Sato.

Toyota’s wage increase is applicable on part-time and senior contract employees, and the firm agreed to comply with union’s request to pay a one-off bonus worth 6.7 months of wages, the automaker said.

Toyota’s pay increase comes after Prime Minister Fumio Kishida’s calls to business leaders to be quick with wage increases, warning them of a return to stagflation if pay increase did not meet the rapid increase in prices.

“We will boost consumption and expand domestic demand by promoting efforts toward structural wage increases,” Kishida said at a lower house budget committee session on Wednesday.

Hours after Toyota’s announcement, rival Honda Motor said it had agreed to union demands for a 5 percent wage increase of 12,500 yen, which is Honda’s biggest jump since at least 1990.