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Toyota, other firms offer pay hikes but pandemic to cap wage growth

  • March 17, 2021
  • , Kyodo News , 5:13 p.m.
  • English Press

TOKYO – Toyota Motor Corp., Nissan Motor Co. and other major Japanese manufacturers offered pay hikes at annual wage negotiations Wednesday, but the pace of wage growth across all sectors is expected to slow this year due to the coronavirus pandemic.

 

Wage growth is critical for Japan to stay clear of deflation and boost domestic demand. But the pandemic has hit some firms and sectors harder than others, prompting the country’s most powerful business lobby Keidanren to say across-the-board pay hikes are “unrealistic.”

 

Toyota agreed on an average pay hike of 9,200 yen ($84) a month as requested by its labor union, higher than the previous year’s 8,600 yen, but the top Japanese automaker did not reveal whether the amount includes a base pay increase. It offered to pay bonuses worth six months of pay.

 

In Japan, wage negotiations often involve labor unions calling for pay-scale hikes based on corporate performance, on top of fixed regular wage increases according to individual performance and other factors such as the length of service, as well as bonuses.

 

Nissan also fully accepted a request by its labor union for a pay hike of an average 7,000 yen a month, the same as the year before. The Yokohama-based carmaker agreed to pay bonuses worth five months of pay.

 

Automakers suffered a sharp drop in sales due to the pandemic but Toyota was relatively quick to recover from the slump, helped by a stronger-than-expected recovery in its key markets such as China and the United States.

 

With earnings dented by the pandemic, some labor unions, including those for Mazda Motor Corp. and Mitsubishi Motors Corp., did not request basic pay hikes.

 

Major electronics makers, meanwhile, offered to raise their base pay for the eighth straight year, settling on an increase of around 1,000 yen a month, roughly the same as the previous year’s amount.

 

The results reflect less earnings damage suffered by the electronics industry compared to other sectors, due partly to increased demand for household items as more people stayed at home during the pandemic.

 

Panasonic Corp. offered an increase of 1,000 yen a month, which includes a higher base pay. Hitachi Ltd. agreed on a base pay hike of 1,200 yen while Toshiba Corp., Fujitsu Ltd. and Mitsubishi Electric Corp. offered to increase their base pay by 1,000 yen.

 

Labor unions in the electronics sector were unified in their request for a 2,000 yen monthly rise in base pay.

 

Annual “shunto” wage negotiations between management and labor unions culminate in March, with results announced by major manufacturers in mid-March followed by nonmanufacturers and smaller firms.

 

Major Japanese firms have taken heed of calls by the government in recent years for wage hikes to support domestic demand. They agreed to raise monthly wages by an average 2.12 percent after wage talks in 2020, according to data by Keidanren, or the Japan Business Federation.

 

Wage negotiations in the nonmanufacturing sector are expected to be tough as airlines, hotels, restaurants and other service providers have taken a severe hit from the spread of the virus with people refraining from going out to reduce the risk of infection.

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