Toyota Motor Corp. on Wednesday agreed to fully meet the salary and bonus demands put forward by its labor union, even though the auto industry is suffering from a global supply crunch and the Ukraine crisis is leaving the economic outlook increasingly unclear.
Nissan Motor Co. and Honda Motor Co. also plan to offer salary and bonus hikes as demanded by their labor unions, the two companies said after their latest wage talks ended Wednesday.
Toyota President Akio Toyoda conveyed the decision to the union during the third round of talks between management and union members, the company said, even though most major Japanese companies are still a week away from giving their responses to their unions in this year's spring wage negotiations.
The automotive industry's wage talks have been closely watched as they have a strong influence on other sectors. The new business year for automakers and many other major companies in Japan begins in April.
The "shunto" wage talks are being held after Prime Minister Fumio Kishida called for pay hikes of over 3 percent by companies that have seen their earnings recover to pre-pandemic levels.
Toyoda thanked union workers for their efforts despite uncertainties caused by the pandemic and the chip shortfall when it announced its decision during the third round of management-labor talks, according to the company.
Toyota's labor union had sought pay increases based on the type of job and position of employees, with the level roughly the same as the previous year. The union called for annual bonuses worth 6.9 months of pay, up 0.9 month from last year.
Nissan chief executive Makoto Uchida said during the talks that the company plans to meet the requests of the union, as it expects to return to the black for the first time in three years in the current business year ending this month, Nissan said. The management will give its official response on March 16.
Nissan's union is demanding a monthly pay hike of 8,000 yen ($69), up 1,000 yen from last year, without disclosing whether a base-pay hike is included in the request. It is seeking annual bonuses worth 5.2 months' pay.
Honda said the management told the union that it plans to offer a monthly base wage hike of 3,000 yen and an annual bonus worth 6.0 months' pay as demanded by the union.
The auto industry has been hit by a supply shortage caused by the coronavirus pandemic, with Toyota last month further revising down its global production plan through March 2022 to 8.50 million vehicles from 9 million announced earlier.
But the three automakers expect to post net profits in the current business year, supported by a weaker yen and reduction in costs. Toyota, the world's biggest carmaker by volume, expects this fiscal year's net profit to match the record 2.49 trillion yen booked in fiscal 2017.
Still, uncertainties for their business outlook are increasing as Russia's invasion of Ukraine is sending energy and commodity prices sharply higher and threatens the global economic recovery from the pandemic.
Toyota suspended operations at its plant in St. Petersburg last Friday, citing supply chain disruptions. The automaker said Monday it is evacuating around 30 employees and their 20 family members amid intensifying tensions surrounding Ukraine.
"I feel strong resentment. War and conflict do not make anybody happy," Toyoda said of Russia's invasion of Ukraine, according to the company. "The lives of our peers in Ukraine and neighboring countries are in danger."