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Toyota agrees to biggest wage hike for workers in 20 years

World’s biggest carmaker meets union demands for third straight year

Toyota agreed to its biggest pay rise in two decades. Photograph: David Zalubowski/AP

Nicholas Takahashi
Wed Feb 22 2023 - 07:26

Toyota agreed to give the biggest wage hikes in two decades in an early sign of momentum in pay gains as the central bank looks for evidence of a wage-price cycle that could lead to policy change.

The company agreed to increase pay including base wages and bonuses at the first round of negotiations, the company said Wednesday. The deadline for reaching a conclusion to the negotiations wasn’t until March.

This is the third consecutive year the worlds biggest automaker has met union demands in full, the company said.

Wages have taken central stage in Japan as the Bank of Japan has indicated it must see stronger wage growth to ensure that the trend in prices is sustainable. The BOJ has a 2 per cent inflation target, but even with key prices rising at 4 per cent in the economy, the central bank is remaining committed to its large stimulus program until wages also show larger gains.

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Toyota said bonuses this year would be equal to 6.7 months salary. It didn’t give a breakdown of the percentage increases in pay for workers defined under numerous categories. The union said the wage increase was the biggest in 20 years.

Kazuo Ueda is the governments pick to take the helm of the BOJ in early April amid simmering market speculation that policy change may follow, a shift that would impact markets around the world.

Current BOJ Governor Haruhiko Kuroda has indicated 3 per cent wage growth is necessary to support stable inflation of 2 per cent. As labour negotiations draw to a close, some of the country’s biggest companies are announcing increases in salaries, base wages and bonuses for the next year. – Bloomberg

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