The world’s largest auto manufacturer Toyota has agreed to meet union demands for the company’s biggest base salary increase in 20 years.

Workers at the Japanese car maker will also receive a rise in bonus payments worth 6.7 months of wages, while the wage increase will also apply to part-time and senior contract workers. The percentage increase was not disclosed by either entity.

The company’s incoming president Koji Saton said that accepting the union’s demands was meant “for the industry as a whole, and in the hope that it will lead to frank discussions between labour and management at each company."

Toyota, one of Japan’s largest employers, has historically reflected the state of wider labour talks in the country. As such, labour advocates in Japan have taken this as an indicator that other ongoing union discussions will be concluded.

Hours after announcing the wage hike at Toyota, rival carmaker Honda also announced that it had agreed to union demands of a 5 per cent increase – its largest pay increase since 1990.

Inflation in Japan is currently at its highest level in 40 years at around four per cent, though it avoided recession in the fourth quarter of 2022.

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