By Makiko Yamazaki
TOKYO, March 5 (Reuters) – Japan’s largest labour union group Rengo said on Thursday its member unions are seeking an average wage hike of 5.94% for this year, underscoring strong momentum in annual labour talks closely watched by policymakers.
The figure, slightly short of last year’s demand of 6.09%, reflects persistent inflation that has squeezed households, as well as a chronic labour shortage in Japan’s fast-ageing society, a scarcity that is forcing companies to raise salaries to attract and retain workers.
But labour union executives voiced concerns about the fallout from the widening Middle East conflict, such as rising oil prices that pose risks for an import-dependent economy, while stressing that it should not affect ongoing wage negotiations.
“Although it’s difficult to foresee the extent to which the economy may be affected, we intend to approach this year’s negotiations with a firm stance,” Tomoko Yoshino, the chief of Rengo, told a news conference.
The average demand surpasses Rengo’s wage increase target of at least 5% in 2026, including a rise in base pay of at least 3%. Base pay rises exclude the seniority-based automatic annual increase already built into the pay scale.
Talks between management and labour unions over the 2026 wage levels would typically conclude around mid-March at major firms and go into effect a few months later.
Last year, Japanese companies agreed to raise wages by an average 5.25%, their biggest pay hike in 34 years and the third straight year of robust growth, according to Rengo. The union group has about 7 million members.
“The level of demands this year is pretty high, even though U.S. tariffs have hurt earnings at export-oriented manufacturers,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“My sense is that this year’s wage talks will probably end up with an average increase of a little over 5%.”
Despite robust wage hikes over the last few years, Japan’s real wages shrank every month in 2025, as nominal pay growth continued to undershoot consumer inflation.
But policymakers have expressed hopes that slowing food inflation will help turn real wages higher this year.
A broad-based pay rise is a prerequisite for the Bank of Japan to continue monetary policy normalisation. BOJ Governor Kazuo Ueda said on Wednesday that wages needed to rise significantly for the country to sustainably and stably achieve its 2% inflation target.
A Teikoku Databank survey of more than 10,000 companies found that a record 63.5% plan to raise wages for full-time employees this year. Among those companies expecting to increase pay, 74.3% cited the need to retain and secure labour as a main reason.
Separately on Thursday, UA Zensen, a labour union group representing retail, restaurant and other industry unions, said its member unions are seeking an average wage hike of a record 6.46% for their full-time employees in the 2026 negotiations.
(Reporting by Makiko Yamazaki; Editing by Chang-Ran Kim and Tom Hogue)
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