Toyota Motor Corp. (7203) agreed to increase base wages in Japan for the first time since 2008 as the nation’s largest company heads for record profits.
The average Toyota Motor Workers’ Union member will earn 2,700 yen ($26) more in base pay per month, Senior Managing Officer Naoki Miyazaki told reporters today. That’s 0.8 percent of last year’s average salary and below the 4,000 yen the union was asking for.
While a weaker yen has helped Toyota forecast a record 1.9 trillion yen profit for the year ending March 31, the raise comes as Japanese companies brace for next month’s sales-tax increase, the first in 17 years. Prime Minister Shinzo Abe has been pressing employers to increase pay for workers to help end more than 15 years of deflation.
“If the Japanese economy was more likely to continue to grow for another 12 months, we would see much more robust growth in wages,” Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo, said in a phone interview before Toyota briefed reporters in Toyota City, Japan.
Toyota shares fell 2 percent to close at 5,728 yen in Tokyo trading, compared with the 2.6 percent drop by Japan’s benchmark Nikkei 225 Stock Average.
When including the 7,300 yen average increase in pay that workers receive based on seniority or promotions, Toyota said its workers will get a 2.9 percent raise on average.
Toyota’s union, which represents more than 50,000 workers for the world’s largest automaker, was granted its request for the average bonus to rise to 2.44 million yen, the equivalent of 6.8 months of salary and the most in six years.
Nissan Wages
Other carmakers raised wages too. Nissan Motor Co. agreed to its union’s request for a 3,500 yen increase in base wages and bonuses equivalent to 5.6 months of salary, spokesman Chris Keeffe said by phone. Honda Motor Co. agreed to raise monthly base wages by 2,200 yen. Kyodo reported yesterday Suzuki Motor Corp. wouldn’t raise base salaries in Japan.
About 1,000 auto-industry unions requested increases in base salaries for the upcoming year, the most since 2008, according to the Japan Confederation of Automobile Workers’ Unions. The average salary raise sought, excluding bonuses, was about 1.3 percent, or 3,048 yen a month.
Beyond cars, companies from Nippon Steel & Sumitomo Metal Corp. to retailer Lawson Inc. (2651) and Daiwa Securities Group Inc. have announced this month they’ll be raising base wages too.
Tackling Deflation
Abe, whose success in lowering the value of the yen has boosted earnings from exports and overseas sales, needs sustained wage gains to help households cope with higher taxes and policies aimed at stoking inflation.
“Deflation should be eliminated from Japan as quickly as possible,” Toyota’s Miyazaki said today. “Toyota and the union will make a contribution. We have a role to play.”
Still, concerns that taxes and prices will rise faster than wages contributed to an indicator of economic hardship climb to a 33-year high. The misery index, which adds the jobless rate to the level of inflation, will climb to 7 percentage points next quarter, based on the median estimate of economists surveyed by Bloomberg News. That would be the highest level for the measure since 1981, when Japan was emerging out of depression after the oil shocks in the 1970s.
Base pay excluding bonuses and overtime rose 0.1 percent in January, the first increase from a year earlier in 22 months, Japan’s labor ministry said March 4. Still, overall pay fell 0.2 percent, the first drop in three months.
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