Toyota and Honda announce biggest pay rises in decades

Toyota and Honda announce biggest pay rises in decades

Toyota and Honda, two Japanese automakers, have agreed to give their employees in the country the largest pay raises in decades.

They are the most recent companies in the world's third largest economy to raise wages as prices rise.

Japan's inflation rate was at its highest in over 40 years, according to official figures released last month.

This has put pressure on businesses and governments to assist people as their purchasing power has shrunk.

Every year, Japanese companies hold weeks of pay negotiations with unions before announcing their decisions around the middle of March.

The automobile manufacturers have not stated why this year's announcements were made earlier than usual.

Toyota announced on Wednesday that it will meet union demands for pay and bonuses, with wages increasing by the most in 20 years.

Toyota's incoming president, Koji Sato, expressed hope that the move would have a positive impact on the Japanese automotive industry and "lead to frank discussions between labour and management at each company."

When contacted by the BBC, the company declined to provide additional information.

Meanwhile, Honda told the BBC that it had "fully responded" to union requests for wage increases and bonuses.

The company announced a 5% pay increase, the largest since 1990 and higher than Japan's inflation rate.

According to a Honda spokesperson, the additional funds will be distributed primarily to younger employees as starting salaries are increased.

"Despite the difficult business environment, management has a strong desire to create an environment in which all employees can... work with a sense of urgency," the spokesperson added.

Earlier this year, Japan's Prime Minister Fumio Kishida called on businesses to raise wages in order to assist people struggling with rising prices.

Fast Retailing, the parent company of Uniqlo, announced in January that it would increase employee pay in its home country by up to 40%.

From the beginning of March, the new pay policy will apply to full-time employees at the company's headquarters and company stores in Japan, according to the company.

In Japan, both price and wage growth have been stagnant for decades.

In recent months, global inflation has risen as countries relax pandemic restrictions and the Ukraine conflict drives up energy prices.

Japan's core consumer prices rose 4% year on year in December, more than doubling the central bank's target level and the highest rate in 41 years.