Economy Toyota agrees to biggest wage hikes in two decades

The decision by Toyota marks the third year it has fully met wage hike demands in the so-called shunto spring negotiations between unions and management. The union of the top automaker has called for the highest-level wage raise in 20 years to offset the impact of high inflation. Meanwhile, Honda said it will meet its union's demands of a 19,000 JPY ($141) increase in total monthly pay, including a 12,500 JPY rise in the basic pay scale, both the highest in 30 years, as well as an annual bonus worth 6.4 months of pay.

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Wages have taken center stage in Japan, with the Bank of Japan having indicated that it must see stronger wage growth to ensure that the trend in prices is sustainable. The BOJ has a 2% inflation target, but even with key prices rising at 4% in the economy, the central bank is remaining committed to its massive stimulus program until wages also show larger gains. Toyota said bonuses this year would be equal to 6.7 months' salary. It didn't give a breakdown of the percentage increases in pay for workers defined under numerous categories. The union said the wage increase was the biggest in 20 years.

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