Japan's Top Labor Union Targets Big Pay Bump, in Line With BOJ Aims

By Megumi Fujikawa

TOKYO--Japan's largest labor union group is seeking another year of wage increases big enough to anchor pay growth against persistent inflation.

The Japanese Trade Union Confederation, known as Rengo, said it will demand wage hikes of at least 5% at the shunto negotiations that take place every spring between the country's unions and employers.

The organization, which sets the tone for the annual wage talks, is urging member unions to make a 6% salary increase their main focus and set 5% as the floor.

It also announced a new medium-term wage target aimed at closing the gap with other advanced economies and locking in the gains made so far.

The moves reflect labor leaders' determination to ensure workers' pay keeps pace with inflation as yen weakness and high energy costs pressure household purchasing power.

Japan's inflation-adjusted wages started rising gradually this year, increasing 1.5% on the year in August. That's welcome news for the central bank's push to ensure that pay and price increases sync up in a way that enables healthy spending and stable growth. But uncertainty around how long the war in the Middle East will last and how the ensuing oil shock will affect Japan's businesses and economy complicates that goal.

Rengo said a baseline cruising speed for the economy requires 2% inflation and real wage growth of at least 1%.

"The shunto talks have reached a critical point: transitioning from achieving high wage hikes as a one-off win to establishing high annual wage gains as a shared foundation for both labor and management," said Kenji Yamamoto, an economist at Daiwa Securities.

For the Bank of Japan, the key lies in whether wage growth momentum accelerates further, and if it continues and spreads across the economy, he said.

For now, the central bank expects the uptrend in wages to continue as severe labor shortages pressure companies to raise pay, though some smaller firms are reporting difficulty in passing on surging input costs due to the conflict.

This year's shunto resulted in a third year of overall salary increases averaging above 5%. But Japan's wages remain low compared with those in other major economies, Rengo said.

"Business leaders must confront the reality of Japan's low wage levels," Akira Nidaira, a senior Rengo official, said at a news conference this week.

The labor group's new framework sets a median salary level that builds in a 15% increase by 2030. Its baseline goal is for a monthly salary of 360,000 yen, or about $2,300, for a 35-year-old worker and 340,000 yen for a 30-year-old.

Corporate responses to demands by Rengo, which represents roughly 7 million workers, typically form the benchmark for national pay trends, including for non-unionized small businesses.

In a draft of its shunto negotiation strategy released Thursday, the organization emphasized the need for Japan to restore its international wage standing.

"The goal is to move out of the lowest rank among major economies by 2030," Rengo said.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

October 22, 2026 03:31 ET (07:31 GMT)