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Rengo is Japan’s largest labour union group and have announced that they would be seeking wage hikes of 5% or more in fiscal year 2026. That would see them try to target another bumper wage hike for a third year running. However, the big challenge this time around is that firms will have more difficulties in delivering that amid lower corporate profits from US tariffs. So, it’s going to be a challenge to see how they can keep up the wage momentum.As a reminder, the figure in 2023 was 3.80%. In 2024, it was 5.10%. And in 2025, it was 5.25% – watered down from the initial figure of 5.46%.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
Rengo’s push for a 5% wage hike in 2026 is significant for traders, especially in the context of Japan’s ongoing economic recovery. This move signals a potential shift in labor dynamics, which could influence inflation expectations and consumer spending. If successful, it might lead to increased disposable income, bolstering domestic demand and impacting sectors like retail and services. Traders should keep an eye on the Nikkei 225 and Japanese yen, as wage growth could affect monetary policy decisions by the Bank of Japan. A sustained wage increase could also lead to upward pressure on inflation, prompting the BOJ to reconsider its ultra-loose monetary stance. However, there’s a flip side: if companies resist these hikes due to rising costs or economic uncertainty, it could lead to labor unrest or slower growth. Watch for any reactions from major corporations and the government, as they might influence market sentiment. Key levels to monitor include the Nikkei’s performance around 30,000 and the yen’s strength against the dollar.
📮 Takeaway
Traders should watch Rengo’s negotiations closely; a successful wage hike could impact the Nikkei 225 and yen, especially if inflation expectations rise.
