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Toyota holds off response on wage talks after first round

Published 02/20/2024, 11:07 PM
Updated 02/21/2024, 05:11 AM
© Reuters. FILE PHOTO: A man walks past a Toyota logo at the Tokyo Motor Show, in Tokyo, Japan October 24, 2019. REUTERS/Edgar Su/File Photo

By Tetsushi Kajimoto and Maki Shiraki

TOKYO (Reuters) -Toyota Motor, the world's biggest automaker, did not reach an immediate agreement with its union over demands for hefty pay hikes on Wednesday but will continue talks in coming days, raising doubts about current expectations for wage talks.

Toyota (NYSE:TM) has long served as the pace-setter for Japan's annual spring labour-management wage offensive, and had accepted the union's demand in full on the first day of the annual wage negotiations in the past two years.

"I understand that we both have mutual recognition about the need to secure talent by improving wages and other treatment," said Hiroki Akiyama, deputy secretary-general of the Federation of All Toyota Workers' Union.

"However, we have not yet reached a stage today where we can discuss pay levels. Negotiations have just started so we will deepen concrete debates while helping each union member cope with the situations they are in."

In a sign last year's wage growth last year still had momentum, Honda (NYSE:HMC) Motor, Japan's second-largest automaker, on Wednesday said it responded in full to union demands for a record rise in base pay and bonus payments.

Prime Minister Fumio Kishida's government is counting on wage talks to drive sustainable pay hikes and stable inflation and put a decisive end to about two decades of deflation.

This year's labour talks are being closely watched by the Bank of Japan, which sees sustainable wage and price hikes as a prerequisite to normalise monetary policy.

Toyota's labour-management talks are scheduled to take place again on Feb. 28 and

March 6, before a formal offer for 2024 pay hikes on March 13 along with other blue-chip Japanese companies. If Toyota agrees to the union's demands, it would mark the fourth straight year of full acceptance.

The Federation of All Toyota Workers' Union demands record bonus payments worth 7.6 months of salary, while seeking monthly pay raises of up to 28,440 yen ($189.57) depending on job qualifications and occupation.

Japanese labour unions have entered this year's annual wage talks with demands for pay rises well in excess of last year's hikes, which were the biggest in more than three decades.

Many blue-chip companies are due to formally offer unions handsome pay increases on March 13, followed by small firms in the coming months.

Private-sector economists expect major firms to offer wage hikes of about 3.9% on average, the largest in 31 years. Excluding seniority-led pay scale, however, base pay that determines the strength of incomes, may undershoot rising prices, heaping downward pressure on real wages.

© Reuters. FILE PHOTO: A man walks past a Toyota logo at the Tokyo Motor Show, in Tokyo, Japan October 24, 2019. REUTERS/Edgar Su/File Photo

If workers manage to secure the expected wage hikes, that could lay the ground for the central bank to exit its negative rates as early as in March or April.

($1 = 150.0200 yen)

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