Japan’s automotive unions are preparing to seek stronger wage increases in 2027, as manufacturers face growing competition from Chinese automakers and seek to attract and retain skilled workers.

The Confederation of Japan Automobile Workers’ Unions (JAW), which represents approximately 780,000 employees across 12 unions, wants next year’s negotiations to move beyond pay rises designed primarily to offset inflation.

JAW president Akihiro Kaneko believes that future increases should better reflect productivity and the value created by workers, helping address decades of wage stagnation in Japan.

The union’s members secured an average monthly wage increase of 4.81% during this year’s negotiations, including base-pay rises of 3.58%. However, Kaneko said Japan should avoid competing with Chinese manufacturers purely on cost, instead prioritising investment in people and higher-value products.

The comments come as Chinese automakers expand rapidly, particularly in electric vehicles, placing additional pressure on established Japanese manufacturers including Toyota and Honda.

Japan’s automotive industry supports approximately 5.5 million jobs and traditionally plays a significant role in shaping the country’s annual wage negotiations.

Rengo, Japan’s largest labour federation and JAW’s parent organisation, has already outlined an ambitious target for 2027, centring on wage increases of 6%, while maintaining a minimum benchmark of 5%.

The negotiations will also reflect renewed inflationary pressures. Japan’s core consumer inflation reached 2.1% in September, exceeding the Bank of Japan’s 2% target for the first time in nine months.

Stronger wage growth is increasingly viewed as essential to supporting household incomes and maintaining Japan’s industrial competitiveness.