Japan's largest employers group on Friday balked at labor's demands for pay raises and instead endorsed a policy that would allow employees to share increases in profit at major firms through bigger bonuses or one-off allowances.

The endorsement came during an extraordinary meeting of directors of the Japan Federation of Employers Associations (Nikkeiren).

The Japanese Trade Union Confederation (Rengo), the country's largest labor umbrella body, has been calling on members to demand a 1 percent pay increase, effective April 1.