TOKYO -- Bucking the trend in Japan's deflationary economy, number-three automaker Nissan Motor Co. said on Wednesday it would heed to its union's requests to raise wages and bonus payments.
The move came as a surprise given that most unions in Japan, even within the rosy auto industry, have not asked for a rise in base salary against a backdrop of falling prices and high unemployment.
Nissan officials had also said earlier this month that they feared such a decision would have a ripple effect on group companies, and posed a risk to stable and continuous profit growth.
Announcing its decision two weeks ahead of schedule, Nissan said it would raise the average base salary by 1,000 yen ($8.50) a month and increase annual bonus payments by around 112,000 yen to 2.018 million yen. "The decision is based on our belief that the rise in salaries would be an effective way to motivate our employees," Senior Vice President Kuniyuki Watanabe told a news conference.
"The 2003 business year carries a lot of challenges for us, especially with the sharp fall in U.S. demand recently. We see this pay rise as a form of investment for the future," he added.
Nissan is expected to post another year of record profits in the fiscal year to March 31.
With 30,477 union members, the latest hike would boost Nissan's wage costs by roughly 3.63 billion yen in the 2003/04 business year.
Last year Nissan was one of the few, if not only, major Japanese companies to fully accommodate union demands, agreeing to a monthly wage hike of 1,000 yen and a bonus worth 5.5 months of salary.
Watanabe, however, noted that there was still a "sizable" gap between wages at Nissan and rivals Toyota Motor Corp. and Honda Motor Co.