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Toyota (TM) Agrees on Its Highest Wage Hike in 3 Decades
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Toyota Motor Corporation (TM - Free Report) has agreed to the union’s demand for an increase in wages and bonuses for the fourth consecutive year. This reflects a possible establishment of a sustainable wage-price cycle in Japan, coinciding with interest rate hike consideration by the central bank.
The yen strengthened while government bond futures tumbled, indicating traders' anticipation of an imminent action by the Bank of Japan (“BOJ”). This followed initial reports of Toyota reaching an agreement with its unions.
Per the Mainichi newspaper, Toyota agreed to a monthly salary rise of 28,440 yen and a record bonus payment.
Takanori Azuma, chief human resources officer of Toyota, credited suppliers and dealers for the company’s high-level profits. The company is concurrently enhancing the working environment for both its suppliers and dealers.
TM's significant position within an extensive network of automakers and suppliers, employing more than five million personnel throughout the archipelago, positions it as an economic indicator and a trendsetter in corporate pay. A substantial increase in the company's earnings this year is an indication of Japan’s progress toward the coveted cycle of increasing wages and prices, as emphasized by the governor of BOJ for policy considerations.
Negotiations between automakers and unions are integral to Japan's annual spring wage discussions. The prime minister of Japan, Fumio Kishida's administration is urging wage hikes surpassing inflation rates.
In February, Honda and Mazda also announced a wage hike of 5.6% and 6.8%, respectively. Nissan agreed to the union’s demand for a 5% increase in compensation.
Rengo, Japan’s largest union, is set to reveal its initial summary of pay agreements later this week, providing insight ahead of the upcoming BOJ policy meeting. The collective bargaining group is asking for an average wage hike of 5.85%, the most significant increase since 1993.
The increasing salaries have failed to keep up with rising inflation, which is dampening spending among households and businesses. In the last three months, revised growth data has succeeded in pulling the economy out of recession. However, the consumer spending segment of the report has been revised downwards.
The nation’s chronic labor shortage incentivizes workers to ask for aggressive pay that surpasses price growth. Beside the wage hike, Toyota’s union has also demanded a bonus equivalent to 7.6 months of salary last month.
Per the economists, the result of the discussion between automakers and unions hints a stronger wage growth than last year. Per Bloomberg’s survey, the accelerated growth would allow BOJ to bring the world’s last negative interest rate regime to an end by April.
The Zacks Consensus Estimate for MOD’s 2024 sales and earnings per share (EPS) suggests year-over-year growth of 4% and 67.2%, respectively. The EPS estimates for 2024 have improved 22 cents in the past 60 days. The EPS estimates for 2025 have improved 12 cents in the past 30 days.
The Zacks Consensus Estimate for GM’s 2024 sales and earnings suggests year-over-year growth of 1.8% and 17.2%, respectively. The EPS estimates for 2024 and 2025 have improved 17 cents and 32 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for ALSN’s 2024 sales and earnings suggests year-over-year growth of 2.1% and 3.2%, respectively. The EPS estimates for 2024 and 2025 have improved 67 cents and 71 cents, respectively, in the past 30 days.
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Toyota (TM) Agrees on Its Highest Wage Hike in 3 Decades
Toyota Motor Corporation (TM - Free Report) has agreed to the union’s demand for an increase in wages and bonuses for the fourth consecutive year. This reflects a possible establishment of a sustainable wage-price cycle in Japan, coinciding with interest rate hike consideration by the central bank.
The yen strengthened while government bond futures tumbled, indicating traders' anticipation of an imminent action by the Bank of Japan (“BOJ”). This followed initial reports of Toyota reaching an agreement with its unions.
Per the Mainichi newspaper, Toyota agreed to a monthly salary rise of 28,440 yen and a record bonus payment.
Takanori Azuma, chief human resources officer of Toyota, credited suppliers and dealers for the company’s high-level profits. The company is concurrently enhancing the working environment for both its suppliers and dealers.
TM's significant position within an extensive network of automakers and suppliers, employing more than five million personnel throughout the archipelago, positions it as an economic indicator and a trendsetter in corporate pay. A substantial increase in the company's earnings this year is an indication of Japan’s progress toward the coveted cycle of increasing wages and prices, as emphasized by the governor of BOJ for policy considerations.
Negotiations between automakers and unions are integral to Japan's annual spring wage discussions. The prime minister of Japan, Fumio Kishida's administration is urging wage hikes surpassing inflation rates.
In February, Honda and Mazda also announced a wage hike of 5.6% and 6.8%, respectively. Nissan agreed to the union’s demand for a 5% increase in compensation.
Rengo, Japan’s largest union, is set to reveal its initial summary of pay agreements later this week, providing insight ahead of the upcoming BOJ policy meeting. The collective bargaining group is asking for an average wage hike of 5.85%, the most significant increase since 1993.
The increasing salaries have failed to keep up with rising inflation, which is dampening spending among households and businesses. In the last three months, revised growth data has succeeded in pulling the economy out of recession. However, the consumer spending segment of the report has been revised downwards.
The nation’s chronic labor shortage incentivizes workers to ask for aggressive pay that surpasses price growth. Beside the wage hike, Toyota’s union has also demanded a bonus equivalent to 7.6 months of salary last month.
Per the economists, the result of the discussion between automakers and unions hints a stronger wage growth than last year. Per Bloomberg’s survey, the accelerated growth would allow BOJ to bring the world’s last negative interest rate regime to an end by April.
Zacks Rank & Other Key Picks
TM currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked players in the auto space are Modine Manufacturing Company (MOD - Free Report) , General Motors Company (GM - Free Report) and Allison Transmission Holdings, Inc. (ALSN - Free Report) , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MOD’s 2024 sales and earnings per share (EPS) suggests year-over-year growth of 4% and 67.2%, respectively. The EPS estimates for 2024 have improved 22 cents in the past 60 days. The EPS estimates for 2025 have improved 12 cents in the past 30 days.
The Zacks Consensus Estimate for GM’s 2024 sales and earnings suggests year-over-year growth of 1.8% and 17.2%, respectively. The EPS estimates for 2024 and 2025 have improved 17 cents and 32 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for ALSN’s 2024 sales and earnings suggests year-over-year growth of 2.1% and 3.2%, respectively. The EPS estimates for 2024 and 2025 have improved 67 cents and 71 cents, respectively, in the past 30 days.