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Japan’s auto workers get pay raises (a bit) and better bonuses

This news was in from Bloomberg yesterday:

Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., Japan’s three biggest automakers, agreed to pay higher bonuses and raise average base salaries next business year as the companies forecast record sales.

After that, we got a look at the breakdown in numbers: Toyota will increase its workers’ average monthly base pay by 1,000 yen ($8.55 at today’s rate), or about 6.25 yen per hour. Honda is set to increase monthly base pay by 900 yen ($7.69), or 5.63 yen per hour, and Nissan workers will be bringing home an average of 6,700 yen more per month next year ($57.26, or 41.88 more yen per hour).

That may not seem like much, but their average base salaries were already well above the national average: Toyota’s average monthly base will nudge up to 350,580 yen and Nissan’s to 355,400. According to the Ministry of Health, Labor and Welfare’s December 2006 data, average national wages (not including cash from bonuses) stood at 273,175 yen.

The raises in base pay may not amount to much, but Toyota has agreed to pay an average annual bonus of 2.58 million yen ($22,051) per employee, an increase of 8.9% over last year. Nissan’s average annual bonus will be at 2.13 million yen ($18,205), and Honda’s workers will on average see 2.46 million yen ($21,026) in bonuses.

We might remember a month ago, when Toyota Vice President Mitsuo Kinoshita said, “The Japanese wage level is among the world’s highest, so it’s extremely difficult to raise it,” and Kazuo Tanigawa, an executive at Toshiba, stated, “The benefits from improvement in corporate performance should be passed along in bonuses instead of a raise in pay scale.”

That seems to be exactly what has happened, at least in the auto industry.

Katsuhiko Hagiwara, general secretary of the Confederation of Japan Automobile Workers’ Unions, was understandable not so happy about the outcome of wage negotiations with Toyota, stating:

As a leading industry, we insisted on raising the level of our salary to spur consumer spending…It’s regrettable that Toyota didn’t fully meet its union’s request even as it agreed to give the same level of wage increase as last year.

On the other hand, as Yoshihiro Okumura, a general manager at Chiba-gin Asset Management Company in Tokyo put it:

It makes sense for the Japanese automakers to keep wage increases in check to prevent accumulative costs from ballooning, and instead pay performance-oriented bonuses…Controlling costs is crucial to remaining successful.

Very true. Especially if by “remaining successful,” Mr Okumura means, “not turning into the next GM.”

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