Chemistry Board

Toyota is to raise employee bonuses to their highest level in five years, in the latest sign that improving corporate profits are helping boost incomes in Japan.

Toyota on Wednesday agreed to its union’s request that average bonuses for its workers in Japan be raised to Y2.05m ($21,390) per person from Y1.77m last year. That is the highest since the carmaker paid an average Y2.51m bonus in 2008, the same year it posted a record net profit of Y1.7tn. Bonuses dropped in the subsequent years after the collapse of Lehman Brothers triggered a global economic downturn.

Toyota’s decision comes after the company regained the title of world’s largest carmaker by sales and forecast that it would more than triple its net profit this year to Y860bn, from Y285bn in the year to March 2012.

Other Japanese companies have also increased bonuses or wages in response to calls from the prime minister, Shinzo Abe, that companies push up wages alongside government measures aimed at banishing deflation in Japan.

Last month, Mr Abe made the unusual request of the heads of Japan’s three major business organisations that companies making higher profits should consider raising wages.

Mr Abe has staked his political fortunes on ending Japan’s prolonged deflation by setting an inflation target of 2 per cent and putting pressure on the Bank of Japan to do everything it can to achieve that objective.

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