Top Companies Announce Pay Hike In Japan Ahead Of BOJ Meeting

(RTTNews) - Large corporations like Toyota Motor (TM), Nippon Steel (NPSCY.PK), and Honda Motor (HMC) have agreed to increase wages in a move to force Bank of Japan to end negative rates, which are in place since 2016.

The price hike negotiations were concluded during the shunto, an annual session of collective bargaining by labor unions.

Toyota had agreed to increase monthly pay up to 28,440 yen, equivalent to $193, the largest hike by the automaker since 1999.

"We wanted to firmly cover for the impact from rising prices," said Takanori Azuma, Toyota's chief human resources officer. He added while speaking about wage hike decisions by companies, "We need to continue asking tier-one suppliers to pass that down to tier-two suppliers and so on."

Nippon Steel agreed to an 11.8 per cent increase in base salary, whereas Honda announced a 5.6 per cent annual pay bump. Japan Airlines (JAPSY.PK) and Ajinomoto (AJINY.PK) agreed to offer an average 6 percent increase to the base salary. Overall, the economists expect the large companies to conclude this year's shunto by agreeing upon an average wage hike of more than 4 percent, compared to last year's 3.6 percent.

Last year, the pay hike for companies employing 100 to 299 people was 3.32 percent and for companies with less than 100 employees, the same was 2.94 percent.

"We're seeing strong momentum for wage hikes," chief cabinet secretary, Yoshimasa Hayashi, commented. "It's important that the strong wage hike momentum will spread to small and mid-sized firms."

The proposed hike would play an important role in Bank of Japan's decision about what changes to make in monetary policy during its upcoming meeting on March 18-19.