Japan auto unions seek higher wage hikes in 2027 amid skilled labour competition

Japan’s Confederation of Japan Automobile Workers’ Unions (JAW) is considering more ambitious wage demands for its 2027 spring labour negotiations, moving beyond increases designed primarily to offset inflation as the industry seeks to attract and retain skilled workers amid growing competition from China.

“We are discussing raising the bar compared with previous years,” Akihiro Kaneko, president of JAW, told Reuters in an interview on 26 October.

JAW represents 780,000 workers through 12 member unions, including employees of Toyota Motor, Honda Motor and automotive parts manufacturers.

The union group's members secured an average monthly wage increase of 4.81% in the 2026 negotiations, including base-pay rises of 3.58%. This compared with an overall wage increase of 4.94% in the previous year's negotiations, when base pay also rose by 3.58%.

The push for higher wages comes as Japanese employers face continued pressure to improve workers' purchasing power while addressing talent shortages and strengthening their ability to compete globally.

Japan's core consumer inflation averaged 3.1% in 2025. Although inflation remained below the Bank of Japan's 2% target for much of 2026, it accelerated to 2.1% in September, exceeding the target for the first time in nine months.

Japan's automotive industry, which is broadly responsible for the employment of 5.5 million people, plays a significant role in shaping the country's annual wage negotiations, which gather momentum during the first few months of the year.

JAW's plans also follow a more ambitious wage-bargaining policy announced last week by the Japanese Trade Union Confederation, known as Rengo, the country's largest labour union group and JAW's parent organisation.

Rengo has set a target centred on wage increases of 6% for the 2027 annual negotiations, while maintaining a minimum benchmark of 5% or more.

The automotive union group's deliberations reflect the growing focus on wage growth as a means of securing skilled workers and supporting the industry's longer-term competitiveness. As negotiations approach, the proposed targets will help determine the scale of pay increases sought across one of Japan's most important industrial sectors.