Toyota agrees to union's pay hike demands

[TOKYO] Toyota Motor has accepted labour union pay demands, Toyota CEO Akio Toyoda told reporters late on Thursday (Feb 24) , wrapping up annual wage negotiations with unusual speed amid calls by the government for firms to lift wages.

"We have made an offer that fully met the union's demands," Toyoda said after a meeting with Prime Minister Fumio Kishida.

Neither Toyota or its union have disclosed the size of the pay rise that has been agreed.

Kishida is counting on profitable Japanese firms to raise wages to help push his 'new capitalism' agenda of wealth distribution and help the world's third largest economy recover from the pandemic.

The Yomiuri newspaper has reported that the union asked for bonuses equivalent to 6.9 months of annual pay and hikes to monthly wages ranging from 1,600 yen to 4,900 yen (S$19-S$58) depending on the job.

Japan's spring labour talks known as 'shunto' are currently in full-swing at major firms and normally conclude around mid-March.

"It was a positive move by a leading company like Toyota," said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities.

"Toyota may want to offset last year's decline caused by the Covid-19 crisis and compensate its employees given rising inflation. The question is whether other companies can afford to follow suit." Toyota has long served as bellwether of the spring labour talks, with other major firms taking a lead from its pay settlements.

Last year, as Covid-19 pandemic hammered corporate profits, pay increases were the lowest in eight years, with major Japanese companies awarding hikes below 2 per cent.

Japan's biggest business lobby, Keidanren, has urged companies to raise wages, following Kishida's call for uniform pay hikes of 3 per cent or more by profitable firms.

Rengo, Japan's largest labour confederation, has demanded 4 per cent wage hikes, including a 2 per cent rise in base pay.

Toyota has remained upbeat about its full-year profit prospects as tight car supplies caused by a global chip shortage allowed Japan's biggest automaker to charge its customers more. REUTERS