Japan’s UA Zensen union seeks 6% pay hike in 2027 wage talks

One of Japan’s largest labor union groups plans to seek 2027 wage increases for regular employees in line with this year’s target, signaling sustained pressure for higher salaries.

UA Zensen will push for a 6% increase in overall wages for full-time employees — the same as this year — including a 4% rise in base salaries, according to a draft policy framework released Tuesday. The group eventually secured a 4.72% gain for the current year.

The group plans to seek an additional 1% hike for employees at firms where wages lag significantly behind peers, as well as a 7% raise for part-time workers.

The target offers an early sign that Japan’s wage growth may continue, a key factor supporting the Bank of Japan’s case for further interest-rate hikes. In its July outlook, the central bank projected that a cycle of moderate wage and price increases would persist, underpinned by continued labor shortage.

The BOJ is expected to hold rates steady at its meeting ending Friday, while leaving the door open to a December hike, according to people familiar with the matter. Markets are pricing in an 80% chance of a move by December.

UA Zensen represents about 1.97 million workers across the retail, restaurant, materials and service sectors, spanning a broad range of employment arrangements, including part-time and contract workers.

Supported by strong wage gains in pay negotiations earlier this year and easing inflationary pressure, Japanese workers’ real wages have risen for eight straight months through August. Yet, the cost of living remains one of the biggest political headaches facing Prime Minister Sanae Takaichi.

In talks on next year’s wages, a representative of UA Zensen said it would focus on narrowing the gap between companies that have delivered solid pay increases and those that have fallen behind.

UA Zensen’s proposal follows a target set by its umbrella federation, Rengo, which is also seeking wage increases of around 6% next year, slightly above this year’s level.

“Real wages have started to rise across Japan, but given the outlook for prices and the economy, we don’t think this has become a stable trend yet,” Takeshi Matsui, vice president of UA Zensen, told reporters. “We don’t believe real wages have turned positive yet for workers at small and medium-sized companies,” he added.