Toyota Motor Corp. and Hitachi Ltd., two of Japan’s biggest companies, are poised to give its employees a wage increase (or steps equivalent to that) for the first time in six years, pointing to a general direction for other Japanese companies to and help beat the country’s chronic deflation. Both Toyota and Hitachi are set to announce big profits for this year, and they both agree that higher wages is essential for moving the country forward economically.
Japanese Prime Minister Shinzo Abe has been encouraging Japan’s corporate leaders to loosen their purses and spread the profit to the blue collar and white collar level via wage increases, as opposed to just giving bonuses. An increase in base pay will give confidence to consumers to start spending on local products again, thereby lifting the economy – as opposed to bonuses which research data says just end up in the workers’ savings accounts.
At the wage negotiations which started Wednesday, Japan’s workers unions – in what is their first push for a pay increase since 2008 – didn’t ask for the moon, they merely want, on average, a 1% increase in base salary, excluding bonuses and other special pays. For example, the Toyota Motor Workers’ Union is reportedly asking seeking a 4,000 yen increase in monthly basic pay, a 1.15% increase. Unions at Nissan Motor Co., Mitsubishi Motors, and Honda Motor are calling for a base pay increase of 3,500 yen, a 0.96% increase from current wages.
“We will consider whether we can contribute to a virtuous cycle,” said Makoto Kubo, senior executive vice president at electronics giant Toshiba Corp., whose union is asking for a 4,000-yen increase in monthly base salary. “There is no doubt that the connection to the Japanese economy is one point for discussion,” Toyota Motor Corp. Senior Managing Officer Naoki Miyazaki said on Wednesday. “Toyota is not going to ignore that when making a decision,” he said.