As annual labor talks wrap up this week, many of Japan's biggest companies say they have raised wages to the maximum level demanded by labor unions.

For example, Toyota Corporation agreed to raise wages to the required level of 24,450 yen/month (4.2 million VND/month). Mitsubishi Corporation even increased beyond the requested level, to an average of 18,000 yen/month.

The Rengo labor union, with 7 million members, has proposed an average wage increase of 5.46% in 2025. This is the third consecutive year that Rengo has demanded a large wage increase and is likely to mark the highest increase in 34 years.

Wage increases have long been seen as a necessary measure to cope with high inflation, which has increased the cost of living.

However, economists are still not too optimistic, saying that wage increases may not be enough to stimulate consumer demand.

Consumer inflation, which includes fresh food prices, rose 4% in January this year, the highest increase in two years.

In an example reflecting the trend of Japanese people tightening their budgets, Nana Nagayama, 51, traveled from Hokkaido to Tokyo to attend her daughter’s graduation. However, her husband decided not to go with her to save money because he was worried that his salary increase would not be enough to make ends meet.

In a move that shows boosting workers' wages is a top priority, Prime Minister Shigeru Ishiba this week directed authorities to look for ways to encourage higher pay for truck drivers.

The Tokyo government is also studying measures to allow small companies to raise wages for workers.