Toyota Motor Corp. and its labour union have effectively agreed on a pay scale hike of ¥1,300 per month in this year’s shunto wage negotiations. According to terms of the deal, the leading automaker who is regarded as the pacesetter in shunto negotiations will offer a base wage hike for the fourth straight year.

However, the size of pay-scale increase will be much smaller than last year’s agreed level of ¥1,500. Toyota raised the monthly pay scale by ¥2,700 in 2014 and by ¥4,000 in 2015. Meanwhile, the firm is making plans of expanding family allowances, and making overall wage growth bigger, according to informed sources.

Amidst an increasingly severe business environment and growing uncertainties, the management at Toyota is cautious about offering a higher pay-scale hike that would lead to a major increase in long-term personnel costs, Japan Times reports.

See: Real wages up for 1st time in 5 years in 2016

Analysts opine that the lower pay hike at Toyota might affect labour management negotiations at other companies. Toyota will show its wage proposals to the labour union this week. On top of the ¥1,300 pay-scale increase, Toyota will offer an age-based regular salary hike of ¥7,300 a month.

The company will also raise monthly family allowances for second and subsequent children from ¥13,500 to ¥20,000 per head in April, earlier than the initially planned 2021. Overall monthly wages of unionized employees will increase by ¥9,700 on average.

However, the management is yet to meet the labour union’s request for annual bonuses equivalent to 6.3 months’ salary, compared with 7.1 months agreed last year. The firm will fully accept the union’s bonus demand for the seventh straight year. The company will also accept the union’s demand for a daily wage hike of ¥150 for fixed-term workers.

For this year’s shunto, Prime Minister Shinzo Abe called on Japanese firms to offer wage increases as large as last year’s levels. But major electronics maker and their unions have effectively agreed for smaller pay-increases this year, than the last.

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