TOKYO, March 5 - Japan’s largest labour federation, Rengo, on Thursday announced that its member unions are seeking an average wage increase of 5.94% in this year’s round of annual pay talks, signalling sustained pressure for higher compensation across a broad range of industries.
The 5.94% request is marginally lower than the 6.09% demand made in the prior year but reflects enduring inflationary pressures that have eroded household purchasing power as well as a long-running shortage of workers in Japan’s ageing workforce. Union leaders say employers are being pushed to raise pay in order to attract and keep staff amid that tight labour market.
Rengo officials also noted risks stemming from the widening conflict in the Middle East, including the potential for higher oil prices. They cautioned that such developments pose downside risks to an economy that relies heavily on imports, while emphasising that these external shocks should not derail the ongoing wage negotiations.
The 5.94% average sought by Rengo exceeds the federation’s stated objective for 2026 - a total pay rise of at least 5%, which must include a base-pay component of at least 3%. The federation clarifies that requested base-pay increases exclude automatic, seniority-based annual increments already embedded in many pay scales.
In the previous year, companies reached agreements to raise wages by an average of 5.25%, the largest increase in 34 years and marking the third consecutive year of sizeable growth, according to Rengo. The federation represents roughly 7 million members.
Rengo and other labour groups see broad-based pay rises as a necessary condition for the Bank of Japan to continue normalising monetary policy following the central bank’s decision in January to lift interest rates to their highest level since 2008.
Collective bargaining over 2026 pay levels at major firms typically wraps up around mid-March, with agreed increases taking effect several months later.
Supporting evidence of wider corporate pay moves comes from a Teikoku Databank survey of more than 10,000 companies, which found a record 63.5% plan to raise wages for full-time employees this year. Among companies intending to boost pay, 74.3% pointed to the need to secure and retain labour as the primary motivation.
Separately, UA Zensen - a union federation representing workers in retail, restaurants and related sectors - said its member unions are demanding an average wage rise of 6.46% for full-time employees in the 2026 negotiations, a record request for that group.