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By Makiko Yamazaki and Kentaro Sugiyama<\/p>\n
TOKYO, March 23 (Reuters) – Japanese companies have agreed to raise wages by more than 5% for a third consecutive \u200cyear, early results from annual labour talks showed on Monday, reflecting sustained gains \u200cin pay that policymakers see as key to fostering durable economic growth.<\/p>\n
Rengo, Japan’s largest labour union umbrella \u200bgroup with 7 million members, said its preliminary tally showed an average wage hike of 5.26% for this year.<\/p>\n
That compares with last year’s initial reading of 5.46%, which was later revised down in stages to a final 5.25% – still the biggest pay rise in \u200c34 years.<\/p>\n
Final figures typically come \u2060in lower than preliminary tallies as wage agreements at smaller companies, which tend to offer more modest increases, are incorporated later in \u2060the process.<\/p>\n
Rengo’s member unions are seeking an average hike of 5.94%, slightly below last year’s demand of 6.09%.<\/p>\n
Many major companies including Toyota Motor, Hitachi and NEC concluded their negotiations last week \u200band \u200bagreed to meet union demands in full, offering \u200blarge pay increases for another year \u200cas competition for workers remains intense.<\/p>\n
While this year’s wage talks have so far been spared major damage from surging oil prices and supply chain disruptions driven by the Middle East conflict, economists say heightened uncertainty could make management at smaller firms with thinner margins more cautious.<\/p>\n
Some analysts said higher oil prices and their impact on inflation \u200ccould intensify upward pressure on wages.<\/p>\n
An oil-spike-led boost \u200bto inflation would erode real wages, said Kentaro Koyama, \u200bchief economist for Japan at Deutsche \u200bSecurities. “This could intensify workers’ demands for wage increases to protect their \u200cliving standards,” potentially reinforcing a cycle \u200bof rising wages and \u200bprices, he said.<\/p>\n
Despite large increases in nominal pay in recent years, real wages have struggled to turn positive, depressing household purchasing power as inflation has outpaced \u200bpay gains.<\/p>\n
The wage talks are \u200cbeing closely watched by the Bank of Japan, which views broad and \u200bsustained pay growth as key to bolstering consumption and justifying further rate \u200bhikes.<\/p>\n
(Reporting by Makiko Yamazaki and Kentaro Sugiyama)<\/p>\n<\/p><\/div>\n