Japan Auto Unions Seek Slimmer Pay Raises as Economy Stagnates

  • Labor groups pare back monthly raise request from year ago
  • Japan inflation-adjusted pay has declined four years straight

Japan’s auto workers will ask for raises from carmakers led by Toyota Motor Corp. for a third straight year while scaling back from their demands in 2015.

Eleven unions representing workers at Japan auto companies will each seek 3,000 yen ($26) monthly raises for the fiscal year beginning in April, the Confederation of Japan Automobile Workers’ Unions said Wednesday in a statement. The groups asked for 6,000 yen a year ago and reached agreements with companies for 3,000 yen on average.

Automakers are among Japan Inc. companies that have kept a tight lid on wages even as they earn record profits. Japan’s workers eked out a 0.1 percent raise in 2015, with incomes actually dropping by 0.9 percent after adjusting for inflation. Real earnings have declined for the past four years, dragging on consumption and holding back Prime Minister Shinzo Abe’s efforts to spur inflation and growth.

“Wage hikes this year may be lackluster,” Junichi Makino, chief economist at SMBC Nikko Securities Inc., wrote in a Jan. 29 report. “On the union side, base salary increase demands are running at about half the level of last year. Management is cautious on salary hikes given the rise in fixed costs as the yen appreciates.”

Latest Contraction

Japan’s economy shrank in the final three months of last year, the fifth quarterly contraction under Abe. Gross domestic product fell an annualized 1.4 percent, trailing estimates from economists surveyed by Bloomberg News, with declining private consumption contributing most to the drop.

Toyota, Nissan and Honda, Japan’s three biggest automakers, reached agreements last year to increase base wages by less than the 6,000 yen requested by their unions. Nissan boosted monthly pay by 5,000 yen, followed by Toyota’s 4,000 yen and Honda’s 3,400 yen.

The three companies have forecast earning 3.33 trillion yen in combined net income for the fiscal year ending in March, compared with 3.15 trillion yen in the year-earlier period.

Before it's here, it's on the Bloomberg Terminal.