Japan's biggest labor union is set to demand pay hikes of 5 percent or more in next spring's annual wage negotiations, as it aims to sustain the current salary growth momentum, sources familiar with the matter said Wednesday.

While the target is at the same level as the one set for this year's wage talks, the Japanese Trade Union Confederation will also introduce a goal for small- and medium-sized companies, which is likely to be pegged at 6 percent or more, the sources added.

The move comes as member unions secured an average 5.1 percent pay rise this year, marking the first time the figure has exceeded the 5 percent threshold in 33 years, as both management and labor agreed on the necessity to raise wages amid soaring prices.

The labor organization, known as Rengo, decided that the same level of pay hikes should be achieved as cost-push inflation, partly due to the yen's sharp depreciation, has been eroding household living standards, according to the sources.

The financial burden is greater for workers at smaller firms as they tend to receive more modest pay increases compared with larger companies. The average pay hike for smaller enterprises stood at 4.45 percent this year, Rengo data showed.

Wage growth has become one of the major issues during campaigning for Japan's House of Representatives election scheduled for Oct. 27, with the ruling Liberal Democratic Party, led by Prime Minister Shigeru Ishiba, pledging to take steps to ensure pay hikes.