The chairman of the Japan Automobile Manufacturers Association on Wednesday said if deflationary pressure continues in Japan, no pay-scale increases will be possible, even after 2003.

"Wages in Japan are at high levels internationally," Hiroshi Okuda said. "Hikes in regularly scheduled seniority-based wages are necessary, but under the (current economic) circumstances, in which prices are falling, I don't think there's any reason to raise pay scales."

Okuda, also chairman of Toyota Motor Corp., was commenting on why employers and workers at many major Japanese companies, including Toyota, ended wage-hike talks for fiscal 2002 without any pay-scale increases.

In collective wage talks each spring, labor unions customarily demand increases in seniority-based wage scales as well as increases to the base levels within the scales.

But for fiscal 2002, many of those unions had to accept no increases in the scales due mainly to Japan's prolonged economic slump.

But Nissan Motor Co. fully met its union's demands, including those for a pay-scale hike, on instructions from company president Carlos Ghosn.

When asked about this, Okuda said Nissan's case is different from others.

"Nissan had limited pay-scale hikes" in recent years during its struggle to restructure, he said.