Article source: https://mainichi.jp/english/articles/20260318/p2g/00m/0bu/032000c
Article to be deleted after ideas.
TOKYO (Kyodo) -- Many major Japanese companies, including Toyota Motor Corp., on Wednesday fully met their labor unions' demands for wage hikes in annual negotiations, despite the expected increase in costs from higher crude oil prices.
Ideas
Its no surprise that major Japanese companies are meeting the wage hike demands of their labor unions as they have the needed resources to do it and of course they will eventually pass-on the wage increases, which are a cost, to the next in the supply chain including of course the final retail customer.
The challenge of course will be what are small and mid-size companies going to do, as up to 70 percent of all workers in Japan work for small and mid-size companies and not the large name-brand companies that always makes the news, as again, many of the small and mid-size companies just don't have the resources or even the profit margins to match what large companies are planning on doing.
And it's estimated that up to 90 percent or more of businesses in Japan are in the small and mid-size category and again not in the large company category.
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Unions, however, at smaller companies could struggle to win similar wage hikes. Such firms tend to find it harder to pass on higher costs to their customers, especially with the rise in oil and other material prices caused by the crisis in the Middle East.
Ideas
Part of the challenge for small companies in Japan is that many of them might be suppliers to large companies and the large companies, while illegal, might tell the small companies if you increase the prices of the supplies we buy from you we might not keep you as a supplier.
So as such many small companies which might supply large companies are reluctant to try and pass-on their costs to the larger companies for fear of losing significant business contracts.
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Seen as a trendsetter at the annual "shunto" wage talks, Toyota, the world's largest carmaker by volume, fully met its labor union's pay hike and bonus payment demands for the sixth consecutive year.
Ideas
Back around the year 2,000 or sometime like that Toyota, as the story goes or is suggested Toyota decided not increase the wages of its employees as it wanted to be competitive with the up and coming Chinese firms. As such most or many other Japanese companies did the same thing and didn't increase wages, which might have been the beginning of the deflation era in Japan.
So most likely as Toyota is going to increase wages most likely most of many of the large companies are going increase their wages too. And the reason is, as there is a supposed labor shortage in Japan other companies don't want their existing employees quitting and moving to another company, so companies increase their wage as a way to keep their existing employees.
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The automaker is proposing pay increases of up to 21,580 yen ($135) per month while accepting its union's request for an annual bonus equivalent to 7.3 months' pay, down 0.3 month from last year's record-high payment.
Ideas
Only a company, with the financial resources like Toyota, can afford to pay the wage increase as listed and certainly the annual bonus of 7.3 months' pay, which many other companies except a few of the large companies can afford to do.
Of course many or most of the 90 percent of the small business in Japan just don't have the needed resources to pay the kind of wage increases that Toyota or even Honda can as they can only do so much, which means some or many of the employees who work at the small companies in Japan, potentially might be looking for a way to move to a larger companies that pays more.
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Honda Motor Co., which expects its first full-year net loss in the year ending March 31 since its listing nearly 70 years ago, accepted an 18,500 yen pay hike request, while Suzuki Motor Corp. offered a pay increase of 20,500 yen, exceeding its union's demand.
Ideas
Even though both Honda and Suzuki might not be able to really afford to give wage increases of 18,500 and 20,500 yen, they are weary of losing employees to Toyota or any other company as again there is a supposed labor shortage and companies just cant afford to lose talented employees, so they increase the wages as as way to try and keep their employees.
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Struggling Nissan Motor Co. has consented to a monthly pay hike of 10,000 yen as requested by its union, aiming to increase employee morale during its restructuring efforts.
Ideas
Nissan has been struggling ever since the Ghosn situation and hasn't been able to move forward and has to restructure for the last couple of year, even closing some of its plants in Japan and globally too.
At the same time, Nissan probably can't afford to give any kind of wage increase but it too is weary of losing employees to Toyota, Honda, or even Suzuki, so they try to give some kind of wage increase to try and keep their employees happy or try to keep a lot of them from quitting and moving to another company.
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To be continued......
Hitachi Ltd., NEC Corp. and Mitsubishi Electric Corp. each agreed to a monthly base pay increase of 18,000 yen, as sought by their unions.
Major heavy machinery manufacturers Mitsubishi Heavy Industries Ltd., Kawasaki Heavy Industries Ltd. and IHI Corp. also agreed to their labor unions' demands for a 16,000 yen pay increase.
Other companies including Mazda Motor Corp. and Japan Airlines Co. have already met their labor unions' demands although the annual wage talks at major firms typically run from mid-February to mid-March.
Meanwhile, pay hike proposals by Nippon Steel Corp., Kobe Steel Ltd. and JFE Steel Corp. fell short of their unions' demands. The steel industry has been hit by worsening market conditions amid an influx of cheaper Chinese products.
With inflation persisting, major companies mostly offered wage hikes of around 5 percent to 7 percent. "We are seeing solid progress that could lead to a virtuous cycle of growth and wealth distribution across the society," said Yoshinobu Tsutsui, chairman of the Japan Business Federation, also known as Keidanren.
Chief Cabinet Secretary Minoru Kihara said at a press conference that the government "hopes that strong (pay hike) momentum will steadily spread to every corner of the country, small and medium-sized enterprises and nonregular employees," emphasizing the importance of achieving wage increases that outpace inflation.
The Bank of Japan, which raised its benchmark interest rate last December to its highest level since 1995, is also closely monitoring the outcome of the wage talks as it sees rises in both wages and prices as key factors for its future policy.
In its basic policy for the 2026 wage negotiations, the Japanese Trade Union Confederation, the country's largest umbrella organization for labor unions known as Rengo, has set an overall wage hike target of 5 percent or more for the third straight year.
Rengo has set a higher goal of 6 percent or more for unions representing small and medium-sized enterprises, which employ about 70 percent of the country's workforce, aiming to narrow the pay gap with larger companies.