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- Most Japanese firms agree to Union wage hike demands in full
Most Japanese firms agree to Union wage hike demands in full
The central focus early Wednesday is on the outcome of Japan’s wage negotiations, with the country’s largest trade union confederation, Rengo, having demanded pay rises of 5.85% this year, topping 5.0% for the first time in 30 years.
Citing Japanese media outlets, Reuters reported that the union wage demands for a hike of JPY18,215 have been met.
In sync with the Japanese unions’ demands, Toyota responded in full to the Toyota Automobile Workers' Union's demands for wages and annual lump-sum payments (bonuses), which were at record high levels, per Reuters.
The amount of wage increases requested varies by job type and rank, but the maximum amount is 28,440 Yen per month.
Meanwhile, Okuma Corp hiked wages by 15,960 Yen per month.
Additional headlines
GS Yuasa has agreed to union wage rise demands in full.
Mitsubishi Heavy to raise wages by an average of 8.3%, an 18,000 yen base pay increase.
Nissan Motor responded to the Union's wage hike demand in full.
Nippon Steel responded to the Union's wage hike demand in full.
Market reaction
The Japanese firms’ adherence to the Union wage hike demands serves as a positive indication for the Bank of Japan (BoJ) to embark upon the highly anticipated hawkish policy pivot in its March policy meeting next week. The revival of BoJ March rate hike expectations has lifted the Japanese Yen across the board.
At the time of writing, USD/JPY is down 0.11% on the day at 147.51, recovering from a brief dip to near 147.25.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds.
The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen.
A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. Still, the Bank judges that the sustainable and stable achievement of the 2% target has not yet come in sight, so any sudden change in the current policy looks unlikely.
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