Toyota to pay more for parts to help domestic suppliers

TOKYO: Toyota Motor said on Friday it plans to pay more for the domestic components so that suppliers can raise wages which in turn will help it maintain a stable supply base.

Japan's policymakers have said they want to see small firms join larger companies in offering big pay increases in this year's annual wage negotiations.

Toyota's network of domestic parts suppliers extends to about 60,000 companies, and its stance on the annual talks, called shunto, is seen as a bellwether for Japanese companies.

A Toyota spokesperson said the scope of increases in parts prices would be determined on a case-by-case basis.

One point of reference would be the more than 6% wage increase that Japan's largest union group Rengo has sought from small- and medium-sized firms, the spokesperson added.

The plan was first reported by the Sankei newspaper.

The outcome of the annual labour talks, which kicked off last month, will be closely watched by policymakers and the Bank of Japan.

Smaller firms employ about 70% of the country's workers.

They spend far more of their profits on wages than their bigger counterparts, partly because they find it harder to pass on rising labour and materials costs to their clients.