(Reuters) – Toyota Motor Corp said it will give its Japan-based workers their biggest pay raise in 21 years in the year starting in April, heeding a government call to bolster the economy by sharing its surging profit with workers.
Toyota will raise its monthly base pay for workers by 2,700 yen ($26.17) on average, or about 0.8 percent of total monthly pay, marking the first increase in base wages in six years but falling short of its union’s demand for a 4,000 yen increase.
Many of Japan’s leading industries announced the results of annual wage negotiations on Wednesday, amid pressure from Prime Minister Shinzo Abe for generous raises that could boost household spending and help to pull the world’s third-biggest economy out of two decades of deflation.
“There is a certain role that (Toyota’s) labour and management are expected to fulfil in order for the Japanese economy to step out of deflation and attain a virtuous cycle,” Toyota Senior Managing Officer Naoki Miyazaki told reporters at the auto maker’s central Japan headquarters.
“While we have that in mind each year during negotiations, this year that was a little bit more important than usual.”
Toyota, the world’s best-selling car maker, expects record profit for the year to March 31, helped by a weakening yen that has boosted the profitability of its export business.
Including seniority pay of 7,300 yen, Toyota is giving workers their biggest monthly raise since 1993. Adding in the average annual bonus payment of 2.44 million yen brings the total rise in compensation for the year to about 7.6 percent from a year ago.
Offers varied within the auto industry, however.
Nissan Motor Co , Japan’s No.2 carmaker by global sales volume, said it will increase its monthly base pay by 3,500 yen and offer bonuses equivalent to 5.6 months of wages, fully meeting its union’s requests.
But Daihatsu Motor Co , a Toyota group company that specialises in small cars, said it would offer a more modest base pay rise of only 800 yen, citing increased competition in Japan and a slowdown in Indonesia.
Yasunobu Aihara, the president of the Confederation of Japan Automobile Workers’ Unions, said he saw the pay rises as a significant step in lifting the economy from deflation.
“We hope that this will spread widely across the automotive industry, including small and mid-sized companies and irregular workers,” he told reporters.
Japanese electronics companies including Hitachi Ltd , the largest manufacturing employer in Japan with more than 200,000 workers, and Panasonic Corp both said they would boost their monthly base wage by 2,000 yen, half of what their unions requested.