Toyota, others offer large pay hikes amid hope of beating deflation

Major Japanese companies, including Toyota Motor Corp. and Nissan Motor Co., on Wednesday offered their largest pay hikes in decades at annual wage negotiations that could determine whether the country can finally overcome its chronic deflation, Report informs via Kyodo.

The development will likely pave the way for the Bank of Japan to phase out its unprecedented monetary easing. The central bank has indicated its policy decisions would depend on the outcomes of the negotiations.

The government of Prime Minister Fumio Kishida has repeatedly asked business leaders to increase wages at a pace that exceeds inflation. Rising prices for everyday goods as a result of higher raw material costs and the weak yen have weighed on households.

Toyota, seen as a trendsetter at the annual "shunto" wage negotiations, said it had fully met the request of its labor union, which had demanded its largest pay hike since 1999.

Nissan agreed to increase monthly wages by 18,000 yen ($122) on average, the biggest rise for the company since 2005 when its current wage system was introduced.

Nippon Steel Corp. said it will increase base pay by 35,000 yen per month, exceeding its labor union's request by 5,000 yen.

Mitsubishi Heavy Industries Ltd., Kawasaki Heavy Industries Ltd., Mitsubishi Electric Corp. and NEC Corp. also said they had fully met their unions' requests for increased base pay, offering monthly raises of between 13,000 yen and 18,000 yen.

The annual wage talks began around mid-February and are expected to conclude by mid-March at most large companies. The outcomes typically influence negotiations at smaller firms.