Japan Company Wage Increases: Updated Feb. 3, 2024.

 

Japanese firms giving record pay raises this year, poll shows

Article Source: https://www.japantimes.co.jp/business/2023/11/28/companies/japan-regular-pay-raise/

Article:

Japanese firms have raised or will raise monthly average regular wages by a record amount this year, an annual government survey showed on Tuesday.

Policymakers have said hiking wages is essential to ending deflation and to achieving and sustaining an inflation rate of 2% in a stable manner.

Monthly regular pay rose 3.2%, or ¥9,437 ($63.59), on average this year — both record highs since comparative figures began in 1999 — according to a Ministry of Health, Labour and Welfare poll conducted July 20 through Aug. 10 with 1,901 respondents.

Last year, regular pay, which includes allowances but excludes overtime, holiday and special payments, rose 1.9%, or ¥5,534.

Ideas:

For many years, Japanese companies considered employees as stakeholders meaning they valued them as being significant parts of the company.

But maybe around 2008 or even earlier, stockholders became the most significant stakeholder in the company. At the same time, maybe because of the global financial crisis, Japanese companies started hording or holding onto cash reserves, and were not giving wage hikes to their employees.

Also, it should be noted, that maybe most of the wage increases. last year, were by large Japanese companies and small and midsize companies either couldn't afford wage increases and or just decided, at that time not give give wage increases.

Over 70 percent of Japanese wage earners don't work for large Japanese companies, so maybe last year many wage earners didn't get a wage increase.

Article:

The percentage of firms that raised or will raise average regular wages this year reached 89.1% versus 85.7% in last year's poll, the highest since 2019.

The impact of that percentage increase was reflected in the survey's record results, a ministry official said.

Wages had been stagnant for decades until last year, when rapidly rising raw material costs propelled inflation and added pressure on firms to compensate employees accordingly.

Ideas:

In the survey mentions 89.1% will give wage increases but are these just large companies or are they also small and midsize companies too.

An economy doesn't run on large companies only, even though they get most of the news about the economy, as most economies, globally, are run on small and midsize companies. 

Unfortunately, it seems the Bank of Japan is relying on large companies to pull Japan's economy out of its stagnation and deflation mindset. And if large companies don't give the needed wage increases that the BOJ wants Japan will continue to suffer with continued inflation.

But small and midsize companies too, need to find a way to increase wages, even to the point of increasing prices on their products as a way to pay for the wage increases.

Article:

Major companies agreed to average pay hikes of 3.58% earlier this year, the highest increase in three decades, trade union group Rengo has said.

Early indications from businesses, unions and economists are that the labor and cost pressures. (Typo here)

Ideas:

If small and midsize companies don't increase wages, the Japanese economy might be headed to a haves and haves not situation, with income inequality becoming a major challenge for the Japanese economy.

The 70 percent or so who work for small and midsize companies will be left behind as incomes increase for large companies, while those not working for large companies will be severely constrained in what they can do in the society.

Many think Japan is this rich country. It might have been in the 1980's but since the asset bubble crash of 1989, Japan has steadily lost ground among the richest advanced countries in the world.

Yes, the Japanese stock market might be at record levels, but a stock market doesn't represent most of society.

Have a nice day and be safe!