Toyota and Honda, two titans of the Japanese automobile industry, have reportedly agreed to grant their domestic employees the largest pay increases in decades.
They are the most recent companies in the world’s third largest economy to raise compensation as prices rise.
Japan’s inflation rate reached its greatest level in more than 40 years, according to official data released last month.
This has placed pressure on businesses and authorities to assist individuals as their purchasing power decreases.
Typically, Japanese companies hold wage negotiations with labour unions for several weeks before announcing their decisions around the middle of March.
The automakers have not explained why this year’s announcements were made earlier than usual.
Toyota announced on Wednesday that it will meet union demands for pay and bonuses. Resulting in the largest compensation increase in twenty years.
Koji Sato, the incoming president of Toyota, stated that he anticipated the move would have a positive effect on Japan’s automotive industry and “lead to frank discussions between labor and management at each company.”
The company declined to provide additional information.
Meanwhile, rival automobile manufacturer Honda stated that it had “fully responded” to union requests for wage increases and incentives.
The company announced a 5% salary increase, the largest since 1990 and above inflation in Japan.
According to a Honda spokesperson, younger workers will receive the bulk of the increased salaries.
Despite the challenging business climate, management has a strong desire to create an environment in which all employees can. Advance with a sense of urgency,” the spokesperson added.
To help those struggling with rising prices, Japanese Prime Minister Fumio Kishida urged companies to raise wages earlier this year.
The owner of the fashion chain Uniqlo, Fast Retailing, announced in January that it would increase salaries in its native country by up to 40 percent.
The company said the new pay policy would apply to full-time employees at its headquarters and company stores in Japan beginning in March.
Japan’s price and wage growth had been stagnant for decades.
In recent months, global inflation has increased as countries have eased pandemic restrictions and the Ukraine conflict has driven up energy prices.
In December, Japan’s core consumer prices increased by 4% from the previous year. Which was double the central bank’s target level and the highest rate in 41 years.
