Early signals from Japan’s 2026 wage talks point to another solid round of pay increases, strengthening expectations that the Bank of Japan could raise interest rates soon.
Info via Reuters. In brief:
Labour unions, including Rengo, representing seven million workers, plan to seek wage gains of 5% or more, matching the demands that produced the biggest hikes in 34 years. Even unions in tariff-hit sectors such as autos say they will maintain aggressive targets despite profit pressure from US levies.
The outlook has drawn close attention after BOJ Governor Kazuo Ueda said he needs “a bit more data” on whether firms facing tariffs will still lift pay, a key condition for further tightening. Early business surveys suggest companies intend to maintain strong wage momentum, helped by a tight labour market and resilient manufacturing sentiment.
Economists say firms still have room to raise pay thanks to robust profits, and many expect wage growth near or above the 5% line next year — a threshold seen as crucial for consumption and inflation. Political pressure is also increasing as Prime Minister Sanae Takaichi pushes for pay gains that outpace prices.
Ueda said the BOJ is continuing to gather information and will evaluate the timing of a hike at upcoming meetings. Analysts expect more clarity when he speaks to business leaders on December 1, with a slim majority of economists forecasting a rate hike as early as December.
