A major Japanese labour union group said on Thursday its member unions had struck agreements for substantial wage hikes, although the average rise of just over 5% was slightly smaller than last year.
Policymakers and employers broadly concur that robust pay hikes are needed to help workers cope with sharply higher inflation, an argument strengthened by record corporate profits on the back of a weak yen and the need to retain staff amid labour shortages.
UA Zensen, an umbrella group representing retail, restaurant and other industry unions, said 139 of its member unions had received an average 5.37% increase in monthly wages for full-time workers. That was a bit less than last year's 5.91% which had been the group's highest on record.
Part-timers gained a record 6.53% hike, exceeding last year's 6.45% increase and outpacing gains for regular workers for a ninth consecutive year.
UA Zensen unions have 1.9 million workers at 2,200 companies that include retail conglomerate Aeon (8267.T), Takeda Pharmaceutical (4502.T) and Toray Industries (3402.T).
"We have achieved wage growth far exceeding inflation that will help people's lives," UA Zensen said in a statement.
The announcement follows the conclusion of annual labour negotiations for Japan's biggest companies on Wednesday, with many meeting union demands in full. Electronics conglomerate Hitachi (6501.T), for example, said it had agreed to a record 6.2% increase in monthly wages.
Economists expect Japan Inc's average pay hike for 2025 to be similar to last year's 5.1% rise, which enabled the central bank to exit its decade-long super-loose monetary policy.
This year, much of the focus is on whether the average pay hike will exceed 5.5%. If it does, that could spur consumer spending and in turn the Bank of Japan to accelerate its current pace of rate hikes beyond once every six months or so, some economists have said.
Rengo, Japan's largest labour union umbrella group with 7 million members, will release a closely watched report on agreed terms on Friday. Its unions were seeking an average hike of 6.09%, up from 5.85% last year.
Bank of Japan Governor Kazuo Ueda sounded an optimistic note about prospects for consumer spending.
"From now onward, we will likely see import cost-driven inflation moderate. Wages, on the other hand, continue to rise steadily," he told parliament on Thursday. "As such, we expect real wages and consumption to improve ahead," Ueda added.
The BOJ is set to keep rates steady at next week's policy meeting, though the board may discuss a hike as soon as May with an eye on domestic inflation and market volatility induced by uncertainty on U.S. trade policy, sources have said.
