The labor union for Toyota Motors is expected to demand the largest annual bonus on record in the financial year running through March, worth a record of 7.6 months of pay compared to the previous high of 7.2. Other companies have also announced plans to increase their wages beyond what they offered last year, a year during which most Japanese automakers offered their largest pay increases in 30 years—said to make up for labor shortages and pressure from the increasing cost of living.
The union will reach a formal decision on the matter by the end of February, ahead of Japan’s spring wage talks, which end in mid-March. The wage talks are considered by the Bank of Japan to be an important part of reaching sustainable wage growth and reducing inflation.
Toyota is also expecting to post a record for consolidated operating profits, amounting to 4.5 trillion yen (~$30.45 billion) for the same period, with the trade union also expected to demand high monthly pay hikes. Last year, the union’s bonus was worth around 6.7 months of pay.
The situation reflects the pressure from the increasing cost of living and labor shortages. It also indicates a concerted effort by companies to keep up with demands for higher wages and bonuses driven by the economic and labor market conditions.