Toyota's profits unprecedented, announces wage increase

Japanese Toyota Motor reported unprecedented profits and yesterday announced its first raise in base pay since 2008.

Toyota Motor announced that the average monthly base pay for union members would rise by 2,700 yen ($26). Toyota will also pay a bonus averaging 2.44 million yen, equivalent to 6.8 months' pay, setting a 6-year high.

Although the yen's depreciation helped Toyota forecast a record profit of 1.9 trillion yen for the current fiscal year, the wage increase was smaller than the union had demanded. Japan's sales tax increase in April is imminent and will pose a challenge to domestic demand. Japanese Prime Minister Shinzo Abe has called on companies to raise wages.

Takuji Okubo, chief economist at Japan Macro Advisors, said in a telephone interview before Toyota announced the wage increase:

"If the Japanese economy can keep growing for another 12 months, we will see more wage increases." The Toyota Motor union, representing more than 50,000 employees, demanded an average base pay increase of 4,000 yen, along with an annual bonus equivalent to 6.8 months' pay, or about 2.44 million yen. The proposal also included an average pay increase of 7,300 yen based on seniority or promotion.

Toyota's Daihatsu Motor and Suzuki Motor Corp. have told their respective unions that they will not raise base pay in Japan this year.