For the first time in seven years, Japanese auto labor unions have set a specific wage increase target, signaling a renewed effort to stimulate broader wage growth across the industry. The Confederation of Japan Automobile Workers’ Unions announced on Wednesday that it will seek monthly pay raises of at least 12,000 yen (USD 79.15) during the upcoming spring wage negotiations.
The proposed hike represents a 5% increase in base pay for workers at smaller member firms with fewer than 300 employees. This move aims to empower smaller unions, including those representing parts manufacturers, by providing a benchmark for their wage discussions.
“With this tangible target, we aim to help smaller union members negotiate for meaningful wage increases confidently,” said Akihiro Kaneko, chair of the confederation, during a press conference.
The group, which represents 12 unions including those at Toyota Motor and Honda Motor, as well as suppliers, covers approximately 784,000 workers. By reviving a numeric wage target, the organisation hopes to align with government and central bank goals of fostering sustainable wage growth, particularly at smaller firms that have historically lagged behind larger corporations.
The broader labor movement in Japan, led by Rengo, the nation’s largest labor union federation, is advocating for wage hikes of at least 5% in 2025. This includes a base pay increase of more than 3%, a key measure affecting bonuses, pensions, and severance pay.
Japanese companies agreed to an average wage hike of 5.1% earlier in 2024, the largest increase in three decades, following a 3.5% rise in 2023, according to Rengo. However, these increases have disproportionately benefited larger firms, leaving smaller businesses struggling to match the pace.
Policymakers are hopeful that sustained wage growth will boost household consumption and provide a much-needed boost to Japan’s economy. The auto unions’ new pay hike target underscores the push to spread the benefits of wage increases more evenly across the economy, ensuring smaller firms and their workers are not left behind in the recovery.