Japan Inc set to offer big wage hikes, paving way for end to negative rates
Toyota Motor agrees to biggest wage hike
TOKYO — Some of Japan’s biggest companies are expected to formally offer sizeable pay increases at annual talks with unions that wrap up on Wednesday, clearing the way for the central bank to end negative interest rates as early as next week.
Economists see substantial wage increases as a prerequisite for the Bank of Japan (BoJ) to declare that its long-held goals of sustainable wage growth and stable prices are in sight and usher in an end to negative rates in place since 2016.
The bank, which has stuck with massive stimulus and ultra-low rates for years longer than other developed countries in an attempt to jumpstart a moribund economy, is set to hold its next policy setting meeting on March 18-19.
Workers at major firms have asked for annual increases of 5.85%, topping the 5% mark for the first time in 30 years, according to Japan’s biggest trade union grouping, Rengo. As a result, some analysts expect this year’s wage increases at 5% or more, from just under 4% previously. That would be the biggest increase in some 31 years.
Unions across industries, including automobiles, electronics, metals, heavy machinery and the service sector have all demanded hefty pay hikes.
While rising wages are one of the few bright spots in the world’s No. 4 economy — Japan narrowly escaped a technical recession at the end of last
year — it remains unclear whether the country is soundly back on the path top recovery.
“Labor shortages and rising costs of living are the two driving factors behind the rising wages,” said Hisashi Yamada, a professor at Tokyo’s Hosei University and an expert on labor policy. “Going forward, it’s unclear whether further wage growth will or spread through the economy.”
Representatives of the government, labor and management are due to hold a joint meeting later on Wednesday to take stock of their talks this year. All of them are “in the same boat, looking at the same direction,” they previously said.
TOYOTA MOTOR
Toyota Motor agreed to give factory workers their biggest pay increase in 25 years on Wednesday, heightening expectations that bumper pay raises will give the central bank leeway to make a key policy shift next week.
Toyota, Panasonic, Nissan and a number of other of Japan Inc’s biggest names said they had agreed to fully meet union demands for pay increases at annual wage negotiations that wrap on Wednesday.
The annual talks, long a defining feature of the usually collaborative relationship between Japanese management and labour, are being closely watched this year as the pay increases are expected to help clear the way for the central bank to end its years-long policy of negative interest rates as early as next week.
Toyota, the world’s biggest carmaker and traditionally a bellwether of the annual talks, said it agreed to the demands of monthly pay increases of as much as ¥28,440 ($193) and record bonus payments.
“We’re seeing strong momentum for wage hikes,” Chief Cabinet Secretary Yoshimasa Hayashi told reporters. “It’s important that the strong wage hike momentum will spread to small and mid-sized firms.”
Steelmaker Nippon Steel also said it had agreed to union pay requests in full. —