Japan Company Wage Increases:

 Article Source: https://mainichi.jp/english/articles/20230519/p2g/00m/0bu/062000c

Article:

TOKYO (Kyodo) -- Major Japanese companies raised wages by an average 3.91 percent in this year's spring wage talks, marking the biggest increase in 31 years in the face of repeated calls by Prime Minister Fumio Kishida for pay rises to cope with inflation, Japan's biggest business lobby said Friday.

The average wage increase was equivalent to 13,110 yen ($95) per month, up 5,680 yen from the previous year, according to preliminary data from the Japan Business Federation, also known as Keidanren.

Ideas:

Major Japanese companies increasing wages by an average of 3.91 percent is a very good strategy to keep good talent and get new talent as young workers are looking for the best possible combination of wages, benefits, and wor/life balance.

Unfortunately most likely not enough small and medium sized businesses could afford to match what the major companies did and most wage earners in Japan probably don't work for the major companies.

But even at 13,111 yen per month increase is it going to be enough to overcome the increased inflation and allow worker to spend some of it in the economy.

Article:

The increase was larger than 2.27 percent the year earlier and the sharpest since 1992, when the average wage grew by 4.78 percent.

Japan has been grappling with soaring prices due largely to rising import costs following a weak yen and Russia's war on Ukraine.

Consumer inflation in Japan accelerated to 3.0 percent in fiscal 2022 through March, the fastest pace in 41 years, according to government data.

Ideas:

Its very possible the 3.91 percent increase might not be enough, over the long term to solve Japan deflation challenges and or increase consumer spending and consumer demand in the economy overall. 

What might happen is there might be an increase in the inequality level if small and medium sized companies haven't been able to increase wages that much meaning the major companies workers might see good wages and of course benefits while the rest in the Japanese economy might fall behind.

Consumer inflation increased 3.91 percent but probably has been increasing each month meaning consumers/families have lived an increase in inflation for many months.

The increase in import prices can be attributed to the variance between the US dollar and th Japanese yen which is maybe the result of the BOJ strategy of keeping low interest rates while the US keep increasing the rate.

Article:

As prices of goods ranging from food to gasoline surge, Kishida has repeatedly asked businesses to raise wages at a pace that exceeds the inflation rate and help sustain the economy.

Companies are also under pressure to improve their wage levels to acquire global talent. Japan's wages are the lowest among the Group of Seven industrialized nations, according to data compiled by the Organization for Economic Cooperation and Development.

Ideas:

Again an increase of 3.91percent might be OK for some but maybe not OK for others in the Japanese economy. But its impossible to think companies, major companies, can solve all of the negatives in the econmy by just increasing wages. 

The Japanese governent and the Bank of Japan have to do their part in solving the inflation  challenge and not rely soley on companies to save the economy. 

Japan's work system and work culture is unique in the global economy and it will require more than an increase in wages to get global talent to Japan. Yes, an increase in wages will help but there has to be a change in mindset among Japanese companies if they want to get global talent to come to Japan. 

Article:

The average annual wage in Japan rose some 6 percent in 2021 from 1990 to $39,711, creating a sharp contrast with the United States, which saw a roughly 50 percent increase during the same period, the data showed.

The preliminary data compiled by Keidanren was calculated on the average wage change per labor union member at 92 companies in 15 different industries.

Ideas:

Its not fair to really compare apples and oranges and the Japan economy and work culture maybe benefitted from the lower wages for a while but yes, now wages need to increase not just to get global talent but to get the best talent in Japan too, as young Japanease workers want the best work/life balance, benfits and wages possible.

And yes, if the Japanese economy and industries want to compete globally, the need the best talent from anywhere in the world. But the trend recently has not been toward that kind of mindset thinking as many major companies might still be too insular or only thinking dometiscally and not globally.

But time will tell and maybe companies and the Japanese economy will become more opend to hiring global talent in the future as there seems to be a major labor shortatge in Japan.

Article:

All 15 industries except for steelmakers saw larger wage increases than last year, the data showed. Shipbuilders logged the biggest rise of 6.06 percent, followed by the machinery and metal industry's 5.01 percent and construction companies' 4.64 percent.

The lobby plans to release the final results of the survey in July.

Ideas:

Steelmakers and shipbuilding are labor intensive industries that might require a lot of training and also maybe many young Japanease workers don't want to work in such labor intensive jobs preferring to work in offic type jobs with good work/life benefits.

All four job types just mentiones, while good wage increases its possible again they are not going to get the best talent possible as the jobs are very labor intensive and might be considered below the mindset of a young Japanese college graduate.

However, not all Japanese go on to university as there might be enough Japanese young people willing to work in those kinds of Jobs. But then again maybe not as there is a labor shortage in Japan and these four jobs types felt they needed to increase wages just to get workers to work for them.

Have a nice day and be safe!