Rengo Wants 6%. How to Budget Japan Pay for 2027

Japan's largest union federation, Rengo, has set its target for the 2027 spring wage round at 6%. If you run a Japan subsidiary, that number is now in your 2027 pay budget whether or not anyone in your office belongs to a union. The spring round, the shunto, is how Japan sets its wage benchmark. The only real question is how to turn 6% into your own figures.

What is inside the 6%?

Regular step increases are inside it. Rengo's basic plan, confirmed by its central executive committee on 22 October 2026, puts the guideline at "around 6%, at least 5%," including what it calls the wage-curve maintenance portion, the automatic annual step that Japanese pay scales give for another year of service. The rest is base-up, the part that lifts the whole pay curve. For the 2026 round the wording was "base-up of 3% or more, 5% or more including steps," which implies steps of roughly two points. For 2027, Dai-ichi Life Research Institute's note on the plan puts the base-up component at "around 4%, at least 3%" (the breakdown is not in Rengo's press release itself).

Small-company unions get a separate guideline: the overall target plus at least one point for closing the gap with large firms, which comes to "20,000 yen or more, 6% or more." For fixed-term, part-time and contract workers the guideline is 7%, and in any case more than the rise in the regional minimum wage.

Also new this year: a medium-term goal of wages about 15% above the 2026 level by 2030, and real wages on a stable 1% growth path. Expect 5%-plus demands for several more years.

The calendar is fixed. A draft policy on 19 November, formal adoption at the central committee on 2 December, and the big companies' answer day in mid-March 2027. Most Japan subsidiaries lock their budgets somewhere in between.

Last year the ask was 5%. What did people actually get?

5.01% overall, 4.69% at small companies. Rengo's final tally for the 2026 round, published 3 July 2026, counted 5,162 unions that had settled; the weighted average increase was 16,400 yen, or 5.01%, the third straight year above 5% but 0.24 points below 2025's 5.25%. Unions at companies with fewer than 300 employees got 12,866 yen, 4.69%. Among the 3,732 unions where base-up can be separated out, base-up was 11,510 yen, 3.50%.

The labor ministry runs its own count of 428 large unionized companies, each with at least 1 billion yen in capital and 1,000 employees. Their 2026 settlements averaged 18,167 yen, 5.18%, down from 5.52% in 2025.

Companies without unions show up in a third survey, the ministry's 2025 survey on wage revisions, which covers private firms with 100 or more regular employees (1,847 valid responses). 91.5% raised pay. The average revision was 4.4%. By size: 5.1% at firms with 5,000 or more employees, 5.0% at 1,000 to 4,999, 4.0% at 300 to 999, and 3.6% at 100 to 299.

Each step down in company size costs half a point to a point. The ask is 6%, big companies pay a bit over 5%, and a 100-person company pays 3.6%. Where you place yourself on that staircase is the first budget decision.

Rengo asks for 6%. What reached small companies last year was 4.69% and 3.6%

Pay increase rates (%, including regular step raises). Rengo 2027 basic plan and 2026 final tally; Ministry of Health, Labour and Welfare major-company settlements (2026), survey on wage revisions (2025), regional minimum wage decisions (FY2026), Basic Survey on Wage Structure (2025)

What small companies actually paidOther

The ask　Rengo

• 2027 targetincl. steps, central figure
  6%

Actual increases　by survey

• 428 major companies2026, labor ministry
  5.18%
• Rengo, all unions2026, 5,162 unions
  5.01%
• Rengo, small-company unions2026, under 300 staff
  4.69%
• Firms with 100+ staff2025, labor ministry
  4.4%
• of which 100 to 299 staff2025
  3.6%

Two lines pushing up from below

• Graduate starting pay2025
  +5.6%
• Minimum wageFY2026, national weighted average
  +5.0%

6% is the market's anchor, not yet your number. Split it into steps, base-up, starting pay and minimum wage before you decide.

You have no union. How does the shunto reach you?

Through the going rate, through candidates, and through the minimum wage. None of the three needs a union.

Start with how few companies have one. In the same ministry survey, only 22.0% of firms with 100 or more employees had a union, and 15.7% in the 100-to-299 band. Most Japanese companies set raises by looking at the market, with nobody across the table. Asked what mattered most in deciding the revision, 41.7% said company performance, 17.0% said hiring and retention, 11.9% said protecting jobs, 7.7% said the going rate, and 5.9% said what the parent or group companies did.

You could read 7.7% for "going rate" as small. But behind "performance" and "retention" sit employees and candidates holding a number in their heads, and the number is the shunto result. From February to March, Japanese news reports which company gave a "full answer" to its union almost every day. Your staff don't read Rengo's policy documents. They know what the company next door got.

The second line is starting pay. In the labor ministry's 2025 Basic Survey on Wage Structure, new university graduates earned 262,300 yen a month, in effect the starting salary, up 5.6% in a year; high school graduates at 207,300 yen, up 5.0%. The graduate you hired last year may already earn less than the one you hire this year. Starting pay lifts the bottom of the curve. If the middle doesn't move, a third-year employee ends up below a first-year one, and the third-year employee leaves.

The third line is the minimum wage. For fiscal 2026 the national weighted average is 1,177 yen an hour, up 56 yen, about 5.0%. Tokyo is 1,280 yen from 1 October 2026. For hourly staff, shops and warehouses this is a hard floor. At the central minimum wage council, the labor side argued from "three straight years of 5%-plus raises," and the employer side watched the survey of actual raises at small firms. The shunto and the minimum wage are two links in the same chain.

Turning 6% into your own table

Split it into four lines.

Line one, steps. Do you have a pay curve at all? Many foreign subsidiaries in Japan have no regular step increase and set every raise through the annual review. Then every point you give looks like base-up to your employees, and they compare it directly with the neighbor's "3.5% base-up." In the ministry's survey, 81.2% of firms with 100 or more employees have a regular step system, so Japanese staff assume you do too. If you don't, either match the total to the "including steps" market rate or explain your yardstick to staff. Doing neither is the expensive option.

Line two, base-up. This is where the market really moves: 3.50% actual in 2026, around 4% in the 2027 plan as Dai-ichi Life reads it. If your existing staff get much less than 3%, the candidate market will do the arithmetic for you.

Line three, starting pay and juniors. Check your lowest grade against 262,300 yen. Below it, you can't hire graduates. Above it, but with third-year pay unchanged, you lose third-year people.

Line four, the minimum wage. Check by prefecture, calculate from the October effective date, and go through hourly rates in outsourcing contracts as well as part-time contracts.

Now the money. Say your Japan payroll is 100 million yen a year. At 6% that's 6 million, and with the employer's share of social insurance on top, roughly 1.15 times, about 6.9 million. At 4%, around 4.6 million. The 2.3 million in between is the decision you're making this year. When I wrote about why first-year budgets in Japan run over, the biggest miss was people. That line gets bigger next year.

Should the raise be flat across the company? I don't think so. 6% is an average, and averages only mean something once you split them by person. Put 5% or more on the roles where the market is tight and on the few positions you can't afford to lose, and let the rest follow the curve. The method I use for separating grade, allowance and bonus is in Three-track pay.

One thing I'm unsure about. Rengo's ask keeps rising while results have started to slip: 5.25% in 2025, 5.01% in 2026. Small-company unions edged up from 4.65% to 4.69%, so the gap with large companies narrowed, but it is still there. If the economy turns in 2027, 6% may stay an opening bid and the actual figure may land nearer 4%. Even so, I wouldn't budget at 4%. Budget at 5% and keep a point in reserve. That is far cheaper than budgeting low and topping up mid-year.

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