Toyota Announces Largest Wage Increase in 25 Years
Japan Steel Raises Salaries Beyond Union Demands
Wage Hikes Expected to Boost Inflation and Economic Activity
BOJ Faces Attention on Ending Negative Interest Rate Policy
On the 13th, major Japanese corporations accepted a large-scale wage increase proposal in negotiations with labor unions. This has led to evaluations that the Bank of Japan (BOJ), which has been implementing an unprecedented monetary easing policy, is gradually creating an environment where it can abandon its negative interest rate policy.
According to the Nihon Keizai Shimbun and others, major Japanese companies such as Toyota, Nippon Steel, and Nissan decided on the 13th, the response day for the 2024 spring labor-management negotiations, to accept the unions' wage increase proposals.
Toyota announced that it would fully accept the union's demand for the largest wage increase in the past 25 years since 1999. The Toyota union had been demanding a monthly salary increase of up to 28,440 yen (253,000 KRW) and the payment of the largest-ever bonuses.
Nissan also agreed to raise the average monthly wage by 18,000 yen. This is the largest increase since the current wage system was introduced in 2005. Other automobile manufacturers, Honda and Mazda, had already announced last month that they would raise wages more than the previous year. Honda raised wages by 5.6%, higher than the union's demand, marking the highest increase rate since 6.2% in 1990. Mazda also accepted the union's demand as is, deciding on a 6.8% increase.
The steel industry also raised wages significantly. Nippon Steel announced that it would increase the basic salary by 35,000 yen per month, exceeding the union's demand of 5,000 yen. The wage increase rate is 11.8% for the basic salary alone, and 14.2% including regular promotions. Previously, the union had demanded a monthly increase of 30,000 yen, the highest in 50 years in terms of amount, but the company decided on a much higher 35,000 yen monthly increase.
Other major steel companies, JFE Steel and Kobe Steel, also raised wages according to the unions' demands. The wage increase rates were 12.5% and 12.8%, respectively. Asahi Shimbun reported, "The steel industry is symbolic in this spring labor-management negotiation," adding, "The management's decision was strengthened by the sense of crisis not only due to high prices but also the need to secure talent."
In addition, Hitachi, Panasonic Holdings, Mitsubishi Heavy Industries, Kawasaki Heavy Industries, Mitsubishi Electric, NEC, and Fujitsu fully accepted the unions' demands for basic salary increases, proposing wage increases ranging from 13,000 yen to 18,000 yen per month.
This wage increase decision by major Japanese corporations is expected to play a decisive role in the BOJ's interest rate decision scheduled for June 18-19. Since 2016, the BOJ has continued monetary easing policies to stimulate the stagnant economy. Recently, Japanese households have been under significant economic pressure as prices of daily necessities rose due to increased raw material costs and a weak yen.
Experts expect that the wage increase this year will be larger than last year depending on the negotiation results between companies and unions, and they anticipate that the BOJ will open the door to ending the negative interest rate system. Given Japan's long experience with deflation, there is hope that stable price increases through wage hikes will create a virtuous cycle leading to economic revitalization. The government of Prime Minister Fumio Kishida has repeatedly urged business leaders to raise wages beyond inflation, considering this.
Rengo (連合, Japanese Trade Union Confederation), Japan's largest labor union organization, is demanding an average wage increase of 5.85%, the largest since 1993, in the spring wage negotiations called "Chuntu (春鬪)." Rengo plans to announce the first wage negotiation results later this week. Bloomberg News reported, "In the situation ahead of the BOJ's next monetary policy meeting, the results will partially hint at the meeting's outcome."
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