Toyota accepts biggest wage increase in 25 years

Toyota has agreed to give its Japanese factory workers their biggest pay rise in 25 years, ANP reports. Other major Japanese companies such as Panasonic, Nippon Steel and Nissan also said they would fully comply with the union’s demands for a wage increase during annual wage talks in Japan.

The talks will be closely watched this year. That’s because the wage increase is expected to pave the way for Japan’s central bank to end the country’s negative interest rates that have been in place since 2016. Unlike other major central banks in the world, the Bank of Japan has so far held negative interest rates and stepped up of aid to boost a faltering economy. The central bank will meet again on March 18 and 19 to discuss interest rates.

Fourth year in a row

Toyota, the world’s largest carmaker, said it had accepted demands for a 28,440 yen (over 176 euro) wage increase and recorded bonus payments. The company fully met the demands of the unions for increased wages and bonuses for the fourth year in a row. As in previous years, Toyota did not provide a percentage increase in wages.

Workers in Japan’s largest companies have asked for a 5.85 percent wage increase this year. According to Japan’s main trade union Rengo, wage demands were above 5 percent for the first time in three decades. As a result, economists expect wage growth in Japan to be 5 percent or more this year, down from less than 4 percent a year earlier. That would be the largest increase in nearly 31 years.