What price success for Japan's automakers?

Posted by: Ian Rowley on January 13, 2006

It had to happen sooner or later, but Japan’s automakers are facing the prospect of wage hikes at home. This week the Confederation of Japan Automobile Workers’ Unions said it would demand wage increases at pay negotiations with car company bosses in the spring. When that happens, it’ll be the first time they’ve done so in four years and follows in the footsteps of several other big Japanese unions. One factor is the recovering economy—and prospect of an end to of years of deflation, which made for effective wage increases even if pay levels were fixed. Another is the current success being enjoyed by most of Japan’s automakers, which notched up record market share in the U.S. last year even if the stagnant Japanese market is far from being a bed of roses. The move also highlights skills shortages at Japanese automakers which, like many Japanese companies, are facing up to the problems created by a shrinking workforce. Honda, for instance, has begun rehiring some employees who would previously have been on the golf course after turning sixty, the retirement age at many Japanese companies. Likewise, Toyota now offers one-year contracts to top employees who turn 60 to help plug gaps.

Still, for the time being at least, the auto confederation, which represents 680,000 autoworkers in Japan, is unlikely to ask for the earth. While not yet decided, Japanese media reports suggest unions of Toyota and Nissan are considering asking for rises of $8.70 a month, while Honda unions could ask for $9 to $17. The current average skilled workers basic monthly pay is $2,900 at automakers and $2,300 at smaller players, such as parts suppliers. With combined profits of almost $19 billion in the year to March 2005, Japan’s big three of Toyota, Nissan and Honda, should be able to afford it.

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