Updated Wed, March 13, 2024
FILE PHOTO: Workers install the fuel cell power system in a Toyota Mirai at a Toyota Motor Corp. factory in Toyota
By Tetsushi Kajimoto and Anton Bridge
TOKYO (Reuters) -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, Nippon Steel and Nissan were among some of Japan Inc's biggest names that agreed to fully meet union demands for pay hikes at annual wage negotiations that wrap on Wednesday.
The 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 yen ($193) and record bonus payments. Keeping with past practice, the company did not provide a percentage figure for the salary rise.
"We're seeing strong momentum for wage hikes," Japan's top government spokesperson and chief cabinet secretary, Yoshimasa Hayashi, told reporters. "It's important that the strong wage hike momentum will spread to small and mid-sized firms."
Prime Minister Fumio Kishida has made putting an end to the years of meagre wage growth a top priority to jumpstart feeble consumer spending. Japan's wage increases have kept well behind the average for the OECD grouping of rich countries.
The Bank of Japan is also closely watching the results as a key data point in deciding when to end 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 revive a moribund economy, is set to hold its next policy setting meeting on March 18-19.
"The outcome of this year's annual wage negotiation is critical" in deciding the timing of an exit from massive stimulus, governor Kazuo Ueda told parliament on Wednesday.
Workers at major firms have asked for annual increases of 5.85%, according to Japan's biggest trade union grouping, Rengo, which if agreed upon would breach the 5% level for the first time in 31 years.
Hisashi Yamada, a senior economist at Japan Research Institute and an expert on labour issues, estimated overall increases of 4.2% to 4.3% based on the "quite strong" responses so far, and possibly more than 5% for top firms.
He attributed the rises to the trend of higher wages globally, domestic labour shortages and inflation.
"Still, the sustainability of such strong pay raises and whether the trend of wage hikes will spread to small and medium-sized companies going forward is uncertain," Yamada said.
TRICKLE-DOWN EFFECT
In a further positive sign, the Japanese Association of Metal, Machinery and Manufacturing Workers (JAM), a union representing workers at small manufacturers, said the pay rises secured for members exceeded expectations and there was a change in workers' mindset.
"The Japanese are finally starting to realise that the gap between wages inside and outside the country is widening significantly," JAM Chairman Katahiro Yasukochi told reporters.
Smaller firms employ seven out of 10 workers in Japan but have struggled to offer sizeable pay hikes because they have less leverage to pass on costs to clients.
Akihiro Kaneko, chair of the Japan Council of Metalworkers' Unions, echoed Yasukochi's sentiment, saying he was hopeful that this year's results could lead to a virtuous cycle of higher wages and inflation.
Top companies such as Toyota are under pressure from the government to facilitate wage hikes downstream so that real wages, which are adjusted for inflation, can reverse a 22-month streak of consecutive falls.
"We do hope that our results could spread to all of our suppliers," Toyota's chief human resources officer, Takanori Azuma, told reporters.
"We need to continue asking tier-one suppliers to pass that down to tier-two suppliers and so on," he said, while adding that ultimately, wage decisions were up to each individual company.
(Reporting by Tetsushi Kajimoto, Daniel Leussink, Maki Shiraki, Sam Nussey, Anton Bridge, Satoshi Sugiyama and Leika Kihara; Editing by David Dolan, Chang-Ran Kim, Sam Holmes and Shri Navaratnam)
Japan's overworked, underpaid truckers left behind in wage bonanza
Delivery trucks are parked at a parking area along the highway in Chiba
By Satoshi Sugiyama
Delivery trucks are parked at a parking area along the highway in Chiba
By Satoshi Sugiyama
Wed, March 13, 2024
TOKYO (Reuters) - As Japan's big companies prepare to hand out their heftiest pay hikes in decades, trucking firm owner Ikuko Sakata feels like she inhabits a different reality.
Despite facing some of the country's tightest labour markets and no shortage of demand, small delivery companies like Sakata's can barely afford to make ends meet.
The Tokyo-based company that she runs pays its approximately 80 employees the minimum wage, putting their base salaries at around 280,000 yen ($1,900) a month before overtime.
"That's the best we can do," said Sakata, who took over the 73-year-old family business from her father in 1995. She hopes to do better for the coming year but is afraid that might be difficult.
Sakata's predicament contrasts starkly with the rosy picture emerging for workers' pay at brand-name companies such as Toyota Motor and Nippon Steel.
It also raises questions about whether the time is right for Japan's central bank to finally normalise monetary policy, with sustainable wage increases seen as one of the conditions for an end to negative interest rates.
Most economists expect the Bank of Japan to raise interest rates - for the first time in 17 years - either this month or next.
Wrapping up their annual wage negotiations on Wednesday, Toyota, Panasonic, Nippon Steel and Nissan were among major firms that agreed to fully meet union demands.
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.
The government is counting on such wage hikes to trickle down to smaller and medium-sized firms, which account for a whopping 99.7% of all enterprises and about 70% of the country's workforce. Wage talks for the bulk of small- to mid-sized companies are expected to conclude by the end of March.
FEEBLE BARGAINING POWER
However, among smaller delivery companies, only 57% are planning any wage hikes in the fiscal year from April, according to a Japan Chamber of Commerce survey published last month. Of those, less than a third plan to raise wages by 3% or more.
Experts say the proliferation of players in the industry due to a wave of deregulation in the 1990s was partly to blame for the sector's unique strains.
"There are many small companies in the freight industry and as a result, they have weak bargaining power," said Uichiro Nozaki, an economist at Nomura Securities.
The government has recognised the problem and is taking steps to crack down on the strong-arming of subcontractors. It has also put in place policies to raise standard freight rates and make sure workers are compensated for non-driving duties, in a bid to raise the industry's wages by around 10%.
But another law change taking effect next month to limit overtime to improve truckers' notoriously gruelling hours is feared to, ironically, drive away workers who have long relied on the extra hours to make a living, exacerbating the staffing crunch, industry insiders have said.
Tetsuyasu Kondo, who heads a trucking company in the northern prefecture of Akita, said companies like his need to pass on rising costs to their customers to be able to afford higher pay.
After offering an industry-beating base salary hike of 4.5% last year, Kondo said he hopes to raise wages by a margin that would at least exceed inflation this year.
For smaller businesses like Sakata's in Tokyo, though, asking shippers to pay more could mean losing business.
"We do try to negotiate price increases, but they're never met in full," she said. "At best it's 50%, and most of the time, it's 20% to 30%."
($1 = 147.2700 yen)
(Reporting by Satoshi Sugiyama; Editing by Chang-Ran Kim and Sam Holmes)
TOKYO (Reuters) - As Japan's big companies prepare to hand out their heftiest pay hikes in decades, trucking firm owner Ikuko Sakata feels like she inhabits a different reality.
Despite facing some of the country's tightest labour markets and no shortage of demand, small delivery companies like Sakata's can barely afford to make ends meet.
The Tokyo-based company that she runs pays its approximately 80 employees the minimum wage, putting their base salaries at around 280,000 yen ($1,900) a month before overtime.
"That's the best we can do," said Sakata, who took over the 73-year-old family business from her father in 1995. She hopes to do better for the coming year but is afraid that might be difficult.
Sakata's predicament contrasts starkly with the rosy picture emerging for workers' pay at brand-name companies such as Toyota Motor and Nippon Steel.
It also raises questions about whether the time is right for Japan's central bank to finally normalise monetary policy, with sustainable wage increases seen as one of the conditions for an end to negative interest rates.
Most economists expect the Bank of Japan to raise interest rates - for the first time in 17 years - either this month or next.
Wrapping up their annual wage negotiations on Wednesday, Toyota, Panasonic, Nippon Steel and Nissan were among major firms that agreed to fully meet union demands.
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.
The government is counting on such wage hikes to trickle down to smaller and medium-sized firms, which account for a whopping 99.7% of all enterprises and about 70% of the country's workforce. Wage talks for the bulk of small- to mid-sized companies are expected to conclude by the end of March.
FEEBLE BARGAINING POWER
However, among smaller delivery companies, only 57% are planning any wage hikes in the fiscal year from April, according to a Japan Chamber of Commerce survey published last month. Of those, less than a third plan to raise wages by 3% or more.
Experts say the proliferation of players in the industry due to a wave of deregulation in the 1990s was partly to blame for the sector's unique strains.
"There are many small companies in the freight industry and as a result, they have weak bargaining power," said Uichiro Nozaki, an economist at Nomura Securities.
The government has recognised the problem and is taking steps to crack down on the strong-arming of subcontractors. It has also put in place policies to raise standard freight rates and make sure workers are compensated for non-driving duties, in a bid to raise the industry's wages by around 10%.
But another law change taking effect next month to limit overtime to improve truckers' notoriously gruelling hours is feared to, ironically, drive away workers who have long relied on the extra hours to make a living, exacerbating the staffing crunch, industry insiders have said.
Tetsuyasu Kondo, who heads a trucking company in the northern prefecture of Akita, said companies like his need to pass on rising costs to their customers to be able to afford higher pay.
After offering an industry-beating base salary hike of 4.5% last year, Kondo said he hopes to raise wages by a margin that would at least exceed inflation this year.
For smaller businesses like Sakata's in Tokyo, though, asking shippers to pay more could mean losing business.
"We do try to negotiate price increases, but they're never met in full," she said. "At best it's 50%, and most of the time, it's 20% to 30%."
($1 = 147.2700 yen)
(Reporting by Satoshi Sugiyama; Editing by Chang-Ran Kim and Sam Holmes)
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