Japan's Corporate Giants Embrace Record Wage Hikes Amid Inflation

Japan's largest companies, including Toyota and Hitachi, have agreed to substantial wage hikes for the third year, driven by inflation and labor shortages. While record pay increases aim to boost consumer spending, economists remain cautious about their impact on Japan's economic policy and central bank's interest rate decisions.

In a determined move to counter inflation and labor shortages, Japan's major companies like Hitachi and Toyota have affirmed substantial wage hikes for workers, marking a third consecutive year of increases. These decisions align with 'shunto', the annual spring labor offensive, which concluded on Wednesday.

Hitachi has pledged a historic 6.2% rise in monthly earnings, while Toyota's hikes aim to match the previous year's record levels. Despite these increases, concerns persist about whether they can sufficiently stimulate consumer expenditure and press the Bank of Japan towards a more aggressive interest rate stance.

Economists point out that Japan's average pay raise for 2025 is expected to mimic last year's 5.1%, the steepest in over three decades. Labor representatives from Rengo seek even greater rises to push beyond mere inflation adjustments and genuinely invigorate consumer spending.

(With inputs from agencies.)