Top Japan firms offer big pay hikes, focus on Iran conflict ahead

By Makiko Yamazaki

TOKYO, March 18 (Reuters) – Major Japanese companies, including Toyota, offered big pay hikes in annual wage talks on Wednesday, reflecting strong pay momentum for a fourth consecutive year, although uncertainty from the Middle East conflict clouds the outlook.

The ongoing wage talks have been largely insulated from the impact of higher U.S. tariffs, as companies are eager to reward workers with generous pay increases to retain them amid persistent labour shortages.

Attention is now shifting to whether Japan can sustain strong wage growth beyond this year, as surging oil prices triggered by the Middle East conflict could slow the economy and erode corporate profits.

Annual wage talks between management and labour unions typically conclude around mid-March at major firms, with many, including Toyota, Hitachi and NEC meeting union demands in full on Wednesday.

“As a result of continuous efforts to improve productivity, the automobile industry has continued to implement wage increases that exceed all industries,” Toyota human resources chief Masahiro Yamamoto told a press briefing. For the sixth straight year, Toyota responded in full to union demands, this time for a wage increase of up to 21,580 yen ($135.80) a month and an annual lump sum payment equivalent to 7.3 months’ salary.

Some companies, such as Mazda Motor and Mitsubishi Motors, had wrapped up their wage talks well ahead of schedule after quickly agreeing to meet union demands in full.

Mitsubishi Motors agreed to an average 5.1% pay hike on February 25, concluding its annual labour talks at the earliest point since its founding in 1970.

Rengo, Japan’s largest labour union umbrella group with about 7 million members, will release a first-round tally of agreed terms on March 23.

Its unions are seeking an average hike of 5.94%, slightly below last year’s demand of 6.09%, which resulted in an average pay raise of 5.25%, the largest increase in 34 years.

($1 = 158.9100 yen)

(Reporting by Makiko Yamazaki; Additional reporting by Maki Shiraki and Ritsuko ShimizuEditing by Sam Holmes)