Toyota wage negotiations: The world's largest automaker, Toyota Motor, opted to hold off on Wednesday from providing a formal response to its union's requests for substantial pay raises and record bonuses, injecting some uncertainty into expectations for optimistic wage negotiations.

Traditionally, Toyota has set the pace for Japan's annual spring labour-management wage negotiations, often acceding to the union's demands in full on the first day of discussions for the past two years. However, a spokesperson for the automaker stated that talks would proceed to subsequent rounds without an immediate response.

The ongoing labour-management discussions are scheduled to occur twice more on February 28 and March 6, preceding the formal announcement of 2024 pay raises on March 13, alongside other major Japanese corporations. Should Toyota acquiesce to the union's demands entirely, it would signify the fourth consecutive year of full acceptance.

The Federation of All Toyota Workers' Union has put forth demands for record bonus payments equivalent to 7.6 months of salary, while also advocating for monthly pay increments of up to 28,440 yen ($189.57) based on job qualifications and roles.

This year's wage negotiations see Japanese labour unions pressing for pay rises surpassing those of the previous year, which were already the most substantial in over three decades. Anticipated formal offers from major corporations on March 13 are expected to include generous pay increases, followed by smaller firms in the subsequent months.

Private-sector economists project that major companies will propose wage hikes averaging around 3.9 per cent, the highest in 31 years. However, concerns persist that base pay adjustments, excluding seniority-based increments, may not keep pace with rising prices, thereby exerting downward pressure on real wages.

Prime Minister Fumio Kishida's administration pins hopes on wage negotiations to drive sustainable pay increases, stabilise inflation, and decisively address approximately two decades of deflation.

The outcome of this year's labour talks holds significant implications for the Bank of Japan (BOJ), which views sustained wage and price growth as prerequisites for the normalisation of monetary policy. Should workers secure the expected wage hikes, it could pave the way for the BOJ to exit its negative interest rate policy as early as March or April.

(With Reuters inputs.)