Japan auto union group looks beyond inflation-linked pay hikes for 2027 talks

"We are discussing raising the bar compared with previous years" for the 2027 spring wage talks, Akihiro Kaneko, president of the Confederation of Japan Automobile Workers' Unions (JAW), told Reuters in an interview on Monday.

After securing the strongest wage gains in decades in recent years, JAW believes ⁠annual pay hikes focused primarily on protecting workers from rising living costs are no longer sufficient to reverse decades of wage stagnation, Kaneko said.

Instead, he argued that wages should increasingly reflect gains in productivity and the value created by workers, helping Japan narrow the gap with overseas competitors.

Kaneko said the Japanese automobile industry faces an increasingly tough operating environment due to the rapid rise of Chinese automakers, particularly in electric vehicles.

Rather than engaging in a losing battle on costs with China, however, Japan should focus on developing higher-value products through investment in people, he said.

JAW has 12 unions under its umbrella, ‌representing a ⁠total of 780,000 workers, including those of Toyota Motor, Honda Motor, and parts makers.

JAW's member unions secured an average monthly wage increase of 4.81% in this year's labour talks, including base-pay hikes of 3.58%. That compared with overall wage growth of 4.94%, including base-pay increases of 3.58%, a year earlier.

Last year, Japan's core consumer inflation averaged ⁠3.1%. While it remained below the Bank of Japan's 2% target for much of this year, it accelerated to 2.1% in September, topping the target for the first time in nine months.

Japan's automobile industry, broadly responsible for the ⁠employment of 5.5 million people, typically sets the tone for the country's wage negotiations that swing into full gear in the first few months of the year.

Japan's largest labour union group Rengo, to which ⁠JAW belongs, last week unveiled a more ambitious wage bargaining policy for next year's annual labour negotiations, setting a target centred at a pay hike of 6% while maintaining a minimum benchmark of 5% or more.