TOKYO, March 5 (Reuters) - Japan's largest labour union group Rengo said on Thursday its member unions are seeking an average wage hike of 5.94% for this year, underscoring strong momentum in annual labour talks closely watched by policymakers.
The figure, slightly short of last year's demand of 6.09%, reflects persistent inflation that has squeezed households, as well as a chronic labour shortage in Japan's fast-ageing society -- a scarcity that is forcing companies to raise pay to attract and retain
workers.
But labour union executives have voiced concerns about the fallout from the widening Middle East conflict, such as rising oil prices that pose risks for an import-dependent economy, while stressing that it should not affect ongoing wage negotiations.
The average demand surpasses Rengo's wage increase target of at least 5% in 2026, including a rise in the base pay of at least 3%. Base pay rises exclude the seniority-based automatic annual increase already built into the pay scale.
Last year, Japanese companies agreed to raise wages by an average 5.25%, their biggest pay hike in 34 years and the third straight year of robust growth, according to Rengo.
The union group has about 7 million members.
A broad-based pay rise is a prerequisite for the Bank of Japan to continue monetary policy normalisation after the central bank raised interest rates to the highest level since 2008 in January.
Talks between management and labour unions over the 2026 wage levels typically conclude around mid-March at major firms, and go into effect a few months later.
A Teikoku Databank survey of more than 10,000 companies found that a record 63.5% plan to raise wages for full-time employees this year. Among those companies expecting to increase pay, 74.3% cited the need to retain and secure labour as a main reason.
Separately on Thursday, UA Zensen, a labour union group representing retail, restaurant and other industry unions, said that its member unions are seeking an average wage hike of a record 6.46% for their full-time employees in the 2026 wage negotiations.
(Reporting by Makiko YamazakiEditing by Chang-Ran Kim)
