Japan's Labor Productivity: Updated Jan. 1, 2025.

 

Japan's labor productivity ranks 29th among 38 OECD members in 2023

Article Source:  https://mainichi.jp/english/articles/20241228/p2g/00m/0bu/016000c

Ideas:

One reason for the low productivity in Japan might be the long hours that workers at large Japanese companies work. If they maybe worked less hours their productivity might improve.

Output maybe doesn't need to improve as working less hours will lead to a higher output ratio. Most of the G7 countries work less hours but Japan works longer hours which could result in a skewed productivity response.

At the same time, if Japan had a better work-life balance that too might improve productivity of Japanese companies, as maybe Japanese workers wouldn't be so stressed out everyday from working long hours.

Many of the European countries, and especially the northern European counties have better working conditions, better working hours and better work-life situations compared to Japan, and they have higher productivity levels too.

Unfortunately not all large Japanese companies are moving into the 21st century as some companies seem to be stuck in their traditional Japanese ways and not modernizing that much. For example it wasn't until a few years ago that many Japanese companies were still using fax machines and not using email that much.

For example some or many Japanese universities for professor jobs still require candidates to mail their resume and other documents instead of sending them by email.

While customer service at Japanese service companies is some of the best in the world, Japan is still stuck with a lot of red tape and procedural nonsense, which slows down customer service and unfortunately there is a lot paperwork involved in many Japanese situations. 

For example when in Japan and buying some duty free items there is a lot of paperwork to fill out which makes the entire process less than desirable for tourists.

And its even worse for Japanese citizens as Japan seems to like paperwork for many menial situations.

Japanese companies are a little behind related to technology innovation, as again, they just recently just got rid of using their fax machines at many Japanese offices.

Reskilling sounds good and many Japanese companies are considering it but its expensive too, which might cause some companies to think twice about reskilling. 

While there is a labor shortage in Japan, and probably some companies are considering AI in the workplace not all companies can afford to do it, as it too might be expensive.

Japan is a society of person to person relationships including service workers at department stores or other places where human contact is needed and important. It will be hard to change Japanese societies minds about using AI technology in service dependent businesses. 

Have a nice day! 

Japan Wage Growth: Updated Dec. 27, 2024

 

Japan's wage growth likely to outpace inflation in FY 2024, 2025

Article Source:  https://mainichi.jp/english/articles/20241226/p2g/00m/0bu/031000c

Ideas:

If nominal wages do exceed inflation that might be a good sign for the Bank of Japan to consider increasing the key interest rate.

It might be the first time in many years that nominal wages has exceeded inflation, as Japan has been stuck in an inflation situation for a long time.

But it might be too early to tell as inflation in Japan keeps increasing or has kept increasing for many months.

It must be remembered that even though many large companies increased wages by at least 5 percent, up to 70 percent of Japanese workers don't work for large companies but small or midsize companies many or some of them didn't increase wages by that much. 

So its still quite possible that many Japanese worker's nominal wages are still less than inflation in Japan, which means their disposable income is not good enough to spend in the Japanese economy.

The Japanese government needs to find a way to help the small and midsize companies improve their profit margins so they too can give good wage increases to their workers.

A new report has suggested that Japan is like 22nd among OECD countries related to annual incomes and even South Korea has surpassed Japan, and they are last among the G7 countries.

Its a perplexing situation as to what has happened to Japan the last 30 years or so, when it was at one time one of the richest countries in the world.

Labor unions can demand wages increases all they want and even another 5 percent increase is good but are companies willing to do it again, and will small and midsize companies also increase wages by 5 percent or more and match what the large companies are going to do.

The government too can encourage wage increases but if many companies profit margins are too thin, there might be little chance for some companies to increase wages.

Some time ago, it was reported that many Japanese companies were sitting on huge sums of money and not using it for their workers. That might have been up to 10 years ago, and it might be the same today with some companies.

It has been suggested that maybe Japanese companies have transformed too much into western style companies as before Japanese companies used to take care of their workers, but the priority today is stockholders and stockholder value and not Japanese workers like it was many years ago.

Have a nice day!

BOJ Rate Hike Ambiguity : Updated Dec. 29, 2024.

 

Bank of Japan's rate hike ambiguity causing unwelcome angst

Article Source: https://mainichi.jp/english/articles/20241221/p2g/00m/0bu/011000c

Ideas:

The Bank of Japan seems to always be less than transparent it its communication because the don't want to cause harm to the financial markets so they are usually not so clear sometimes one what they are going to do.

They would rather keep the markets guessing instead of saying something directly that might cause harm. This of course not being direct can backfire with the markets not sure that to do sometimes.

If inflation is really slowing down, that might be a reason, in pure central market strategies to not increase the key rate.

And again, if import costs too are calming down, that too might be a reason to just let the weak stay as it is as it benefits many in Japan.

The economist might think there are no factors, but what happens exactly in the BOJ meetings sometimes is hard to know and the meeting notes that is given to the public might not be what actually is talked about in the meetings.

Perhaps the Bank of Japan is both a dove and a hawk, depending on the mood at the time of the meeting and at the same time, maybe they can't makeup their minds about what do to.

And the reason for that, again, is they don't want to cause any harm to the financial markets so many times they just take a wait and see approach.

Many times what is said in one meeting might be thought of as a mistake and so they next meeting the BOJ officials might say something completely different.

And economic conditions change from one meeting to the next so the economic conditions just before one meeting might be completely different just before the next BOJ meeting.

Central banks don't have to do anything other than watch the economy and makes adjustments as needed. If they think no adjustments are needed they don't have to do anything.

Its not uncommon for central banks to say one thing in one meeting and say the complete opposite in the next meeting, as they might have seen some new data that changed their point of view.

Its sound like again, the financial markets are hanging on every word that the Bank of Japan says instead of just completely waiting to see if the rate will be increased or not instead of jumping to predictions ahead of meetings.

Waiting for more data, might be true or, again, it just an expression when the BOJ doesn't know what to do and is waiting for another time to increase the rate.

The next rate hike might be in March, as yes, the BOJ is waiting to see what will happen in the wage negotiations coming up next year.

Wage increases seem to be on the mind of the Bank of Japan as to what they are going to do. If the wage increases are big enough for the Bank of Japan, that might be a sign that they are going to increase the key rate.

The BOJ might need to improve communication but it must be remembered they are very cautious about what they say, usually, and they don't want to say anything, again, that might upset the financial markets in Japan and globally.

The Bank of Japan's moves have not been wild swings as the BOJ has only made two key rate changes and they were very small. Yes, they might buy a lot of bonds to pump up the Japanese economy but they have been doing that for a very long time.

Key economic indicators might be in line with BOJ's expectations but as new data comes out in the future the BOJ could easily, like they seemed to do often do, delay any rate hikes until they examine the data more carefully.

Most central banks are supposed to be independent from any political party or situation, supposedly free to manage the economy as needed. But in reality that might not be true, and even in Japan the Bank of Japan might be influence by political situations.

Such as the situation with the disposable income situation and allowing more working hours for part-time workers without having to pay income taxes, with an key interest rate increase may or may not have an affect on part-time workers.

Yes, even young married families who have mortgages could be significantly affected by  rate hikes especially if the mother in the family works part-time and the rate hike could wipe out what the wife makes dues to an increase in mortgage rates.

So, again, the Bank of Japan has to look at all situations including any political situations can might affect the Japanese economy such the disposable income tax benefit for young families and part-time workers.

The Bank of Japan as to weigh a lot of variables that affect the Japanese economy, such there are some positive benefits to a weak yen in Japan, such it helps Japanese export companies along with helping Japanese investors overseas, and then there is the idea that a weak yen, might be a reason for the record number of foreign tourists who go to Japan and spend a lot as they have more purchasing power due to the weak yen.

And then there is the weak yen on the domestic economy and importers as Japan is resource poor country and has to import much of what it needs which means import prices are higher than normal and importers will pass-on their import costs to the next in the supply chain including the final customer.

The Bank of Japan rate hike was as big surprise to the Japanese financial markets which kind of went crazy for a few days with their disapproval that they basically were not warned of the rate hike.

The Bank of Japan needs to be very careful as all financial markets, even globally, react to anything and everything good or not so good.

And rate hike might not affect or cause inflation to decrease immediately as it could take months for anything happens in an economy.

Whatever happens with the Bank of Japan there are those who like a rate increase and those who don't like a rate increase so the Bank of Japan is in a no-win situation whatever it does.

And again the Japanese yen might weaken of strengthen either way so in a way the Bank of Japan increasing the rate might not have much of an affect on the weak yen getting weaker.

And yes the timing of a rate hike is very important and even more important is the communication before a rate hike, as again the markets are very volatile and react to anything.

Yes, Ueda might need to see what is going to happen with the wage increases in April of 2025, and if they increases are not to his liking he might again take a wait and see approach.

The key might not be large Japanese companies who most likely will give the needed wage increases that Ueda wants to see, but the challenge is what is going to happen with small and midsize companies, which employ about 70 percent of the Japanese workforce, and if they don't or can't increases wages as much as the large companies it could be challenge for the Bank of Japan and Ueda.

Have a nice day!

Japan Dec. Economic View: Updated Dec. 21, 2024.

 

Japan retains economic view in December, warns of moderate firm profits

Article Source:  https://mainichi.jp/english/articles/20241220/p2g/00m/0bu/036000c

Ideas:

The Japanese government wants to be very careful about what is say as it doesn't want to upset the financial markets in Japan or globally, so they continue to say recovering at a moderate pace.

An economy is very complex as there are many parts or sectors to an economy and the sectors are never growing or not growing at the same pace.

And yes, the weak Japan yen increases the price of imports such as parts and supplies that Japanese companies need from overseas suppliers.

And then there is increased labor costs, as most companies have had to increase wages just to keep or recruit workers as there is a labor shortage in Japan, which means workers potentially have a choice for jobs.

It is no surprise that corporate profits are not where they are expected to be because of the weak Japanese yen and the need to increase wages which both reduce a company's profit margins.

The challenge is small and midsize companies which don't have the same financial resources that large name-brand companies do, so their profit margins are even thinner and some might not have been able to increase wages as they couldn't afford wage increases.

Again, large Japanese companies might be seeing their corporate earning steady but not growing significantly too because of the weak Japanese yen, and increased labor costs.

Its quite possible the Bank of Japan prefers a weak Japanese yen, as long as it stays within a range that the BOJ feels is acceptable.

Anytime the Japanese yen begins to grow stronger against the US dollar Japanese export companies loose millions of dollars as the weak yen is favorable to them.

At the same time, the BOJ is aware that the weak Japanese yen is not good for the domestic economy as it increases imports prices which hurts Japanese import companies.

From 142 to 156 is significant difference that can help many Japanese export companies but also hurt many Japanese import companies too. 

Japan is a resource poor country so it has to import much of what it needs and its also a major exporting country and the Japanese currency is watched a lot by both groups as to how it can affect their companies.

Small and midsize Japanese companies have been having significant challenges recently related to the weak Japanese yen, the increase in material costs, and having to increase wages for their workers to either keep them or attract new workers.

The US economy seems to be the most stable and reliable economy in the work at this time, but there are challenges with the Chinese economy as they are going through a transition period and who knows when it will turn around.

The EU, as usual, is stuck or stagnant and who knows when it finally going to get moving again.

South Korea, has been having is own domestic challenges and its economy is stuck in the advanced economy syndrome of not growing that much these days.

Have a nice day!

Japan Nov. Inflation. Updated Dec. 23, 2024.

 

Japan inflation accelerates in Nov. on reduced energy subsidies

Article Source:  https://mainichi.jp/english/articles/20241220/p2g/00m/0bu/005000c

Ideas:
If the Japanese government has reduced subsidies for utility bills and rice that means, most likely for most Japanese households they will have less disposable income which of course could mean less consumer spending in the Japanese economy.

Increased inflation at 2.3 percent or 2.4 percent, might not seem like much, but for the low-income groups could be a major challenges related to disposable income or other spending they might want to do.

The Bank of Japan might want to stick with its target of 2 percent inflation but it doesn't seem to be doing much to get inflation under 2 percent. But that might be a strategy to not interfere in the natural situation of the Japanese economy, preferring to let inflation decreased on its own.

The Bank of Japan is very cautious and moves very slowly and probably will not make a move that could upset the financial markets in Japan and globally.

Inflation increasing from 2.3 to 2.4 percent is not that big of a change, as especially if it was related to the decrease of energy subsidies earlier.

Once again, the Bank of Japan moves very slow and says it wants to analyze more wage data which indicates its not ready to make a move just yet.

And yes, the next rate increase could be January, but at the same time, if anything unusual happens before then the BOJ don't hesitate to delay the next rate increase.

Japanese households again have to deal with the energy price increases which means their disposable income will be even less, which means less spending in the Japanese economy.

Whether conditions always plays havoc with the prices of produce and the hot summer in Japan played a big part in the reduced supply of rice.

And yes, farmers too have passed on their higher production costs to the next in the supply chain including the final customer.

And lets not forget the increase in prices of coffee and chocolate as producers and wholesales too passed on their increase in material costs to the next in the supply chain including of course the final customer.

As food prices, either at restaurants or supermarkets increase, Japanese consumers will either cut back or they will try to find substitutes that meet their expectations.

The lower-income groups will be hit even harder as they use more of the income for food than the other groups.

The upper-income groups might not even notice the price increases and or they don't care, as it probably doesn't affect them that much.

Household durable goods are not an everyday product and is only bought maybe once a year if even that.

Someone could take this two ways about in the increase in service prices, such service providers had to increase prices to cover the wage increases they needed to give their workers in the regular wage negotiations last April.

And or service providers had to increase wages for new hires as there is a labor shortage in Japan and as there are more jobs available to choose from, they had to hire new workers at a higher wage than normal, and they then had to increase prices to cover the wage increases.

Have a nice day!

BOJ Keeps Rate The Same: Updated Dec. 25, 2024.

 

Bank of Japan keeps rates on hold amid caution over wages, Trump policies

Article Source:  https://mainichi.jp/english/articles/20241219/p2g/00m/0bu/017000c

Ideas:

The Bank of Japan always moves very slowly and if they don't see enough clarity they are not going to change the rate.

The Japanese wage situation is still not clear and maybe the reason for that is up to 70 percent of Japanese wage earners don't work for the large name-brand Japanese companies but instead work for small and midsize companies that didn't give the same wage increase that large companies did.

So maybe the 70 percent who didn't get the 5+ percent wage increase that large company workers got, their disposable income is still not enough to start to spend freely in the Japanese economy.

Sustained wage growth is not going to be that strong unless small and midsize companies can get some support from the Japanese government so that they can increase wages like what large companies are able to do.

Most likely many small Japanese companies are suppliers to large Japanese companies, and large Japanese companies might not agree to the idea of small supplier companies passing-on their increased material costs to the larger companies.

The Bank of Japan needs so specify just what is a positive cycle of wages and prices as is it related to as wages increase then demand for products will increase which means companies will increase the prices.

The Bank of Japan is correct in examining the potential affects of the next administration in the US not only on the affect in the US but also how its going to affect markets and economies globally too.

Everything right now is up in there air as no one knows what is really going to happen, and maybe many Japanese export companies are worried about the possibility of their products becoming more expensive in the US due to supposed tariff situation.

While the weak Japanese yen increases the price of Japanese products in Japan, it might not be that much, but the tariff situation might be enough for US consumers to think twice about buying some Japanese products.

The Bank of Japan might be thinking that the 2014 and 2019 Japanese sales tax increases had a lot of negative side affects that cause consumer spending to decrease over several months. 

So the BOJ might be thinking a possible rate increase might have the same affect with consumers decreasing their spending and companies not going to the banks to take out loans as the rate increase will increase the loan rates in Japan.

Real wages, maybe for large company workers are good, but for all the other workers, which makes up maybe 70 percent of workers just not strong enough to overcome the continued inflation in Japan and doesn't give them enough disposable income.

Most likely, like many countries, most citizens have no idea about the interest rate hike until they have to go to the bank for a loan or they see inflation has continued on in Japan that affects their disposable income too much.

Increasing the key interest rate can some side-affects which might or might not affect all citizens in a country. In that case its unclear if the Japanese people will accept the rate increase, as again, they have no idea what it is or what it does.

It seems the Bank of Japan has not clearly explained what are the expectations for the economy and prices. Does it mean inflation should be at or below the 2 percent target and does it mean prices should be based on consumer demand and consumers spending and not based on companies passing-on their increased costs to the next in the supply chain including the final retail customer.

It years past, the Bank of Japan has often stated the Japanese economy has been too weak for a rate increase so is there GDP growth rate that the BOJ might need to see before it considers a rate increase.

Or is the Bank of Japan just kicking the can down the road until the next meeting in January and then again, they might say we need to continue to see more data.

It seems the US Fed. might be thinking as the as the new administration comes in the Fed will take a wait and see as to what is going to happen to the US economy in 2025.

Inflation in the US might be increasing again, but will it be at the same level as during the pandemic or right after the pandemic.

The Japanese yen as been weak and most likely if will continue to remain weak in the future.

No doubt the Bank of Japan has no real intention, at this time, to increase the key rate, as it hasn't done much the past 15 years to increase the rate.

The Japanese yen has remained weak and maybe the BOJ wants the rate to remain weak to help Japanese exporters, Japanese investors in foreign countries, and the record number of foreign tourists who go to Japan and spend a lot of money.

Then of course there is the domestic economy and Japanese importers who see their import prices increase because of the weak yen, and then pass-on their costs to the next in the supply chain and maybe even the final retail customer.

The BOJ's ultraloose policy was probably a good idea the time in increasing the money supply in Japan so that more consumers and businesses had access to more money which was intended to increase spending in the Japanese economy.

But as stated the results were not there or not as much as expected as the Japanese economy was stagnant and never really improved that much.

And yes, the idea or theory of pumping more money into economy is strategy that can work and has been used in many different countries to stimulate economic growth.

And yes, maybe it was time to change strategies and begin to increase the key rate, but in July the markets were caught off-guard and reacted negatively toward the rate increase.

If the Bank of Japan does actually increase the rate in January the BOJ needs to communicate clearly to the financial markets what they intend to do and not be unclear or say we are still looking at the data. 

Have a nice day! 

Japan Diet Extra Budget: Updated Dec. 20, 2024.

 

Japan enacts 13.9 trillion yen extra budget for economic package

Article Source:  https://mainichi.jp/english/articles/20241217/p2g/00m/0bu/039000c

Ideas:

It seems Japan has a new economic package as its economy doesn't seem to be doing much recently, as it is up and down frequently lately.

The new economic package could be a political ploy to gain support for the current administration that doesn't has a majority the diet.

In relation to the disaster reconstruction costs, many residents in area where the earthquake hit on the west coast of Japan, say recovery is taking a long time.

And of course inflation relief, again, is just like last summer or many time before as the Japanese government just keeps coming with new inflation relief packages, without much affect on the economy.

Increasing the tax-free annual income threshold is a good idea as it will help part-time workers, who are not all college students but working women with children too.

The Liberal Democratic Party has been in power most of time Japan has been a democracy, except for a few years here or there. But now it might need all the help it can get to stay in power.

Once again while needed this economic package seems like the other economic packages aimed to do the exact thing, which helps Japanese households and hopefully stimulate consumer spending in Japan.

A one-off cash handouts for low-income households is needed but how long will it last, one month, two months etc.

As stated before Japan needs some kind of trade agreement with oil producing countries, as Japan is a resource-poor country and has to import much of what is needs including all of its energy needs.

And again, the news from the Noto Peninsula area suggest the recovery efforts are taking way too long, as its going on a year now.

It seems the Japanese government is not too concerned about its fiscal health and it just keeps spending as needed. But that is now common among many advanced countries these days.

Most of the Japanese government debt is owned by Japan, meaning its internal and not external like it was with Greece in 2010.

Like always whenever a initial government spending plan is proposed it never come out the same after all the main actors work on it. 

And this time the same too, as the initial plan was amended to make sure all will agree on the plan, such as addition of increased disaster relief funds and probably some other cuts that were not important at this time.

Free education, for everyone might new for some, but in the US 1-12 grades are free for public schools, but not for private school. In South Korea, its free for elementary schools but not 100 percent free for the other grades. 

To get that one passed it could take some doing as it might increase the budgets of local governments and the overall Japanese government too.

Have a nice day!

BOJ and Possible Rate Hike: Updated Dec. 19, 2024.

 

BOJ weighs skipping rate hike at next week's policy meeting: sources

Article Source:   https://mainichi.jp/english/articles/20241214/p2g/00m/0bu/002000c

Ideas:

The Bank of Japan is very conservative and doesn't make a move if there are uncertainties

 either internal or external.

There are definitely going to be some uncertainties with the US economy in the future, and

 as Japan depends a lot on the US for its exporting, it might be a good time to just sit and

 wait to see what is going to happen the next few months.

Most likely the wage increases that have helped the Japanese economy in the short-term has

 not translated into the economic affect that the BOJ had hoped for such as increases

 consumer spending among Japanese workers.

Yes, the BOJ has been very conservative in making decisions, but that's the nature of the

 banking industry including the Bank of Japan.

Economic indicators might be moving in line with expectations, but they are still not

 enough to get the BOJ to move on a rate increase, as they are also looking globally and

 watching what is going on.

The three key areas they are looking at is China, and its economy, the EU and what is going

 on there, and with the US and the new administration and what is going to happen to the

 US economy.

The BOJ will look for the best time to increase the key rate but it might not be next week and the BOJ meeting, as the US economy and the future administration, seems to be dominating the thinking at this time.

The BOJ current level of 0.25 is very low as the US rate is around 5.0 so there is a significant variance in the two rates which might be the reason for the weak Japanese yen.

A question to be asked is why has the BOJ allowed the rate to be at a historical low, when the Japanese domestic economy is having challenges from high import prices related to the weak Japanese yen.

One reason might be that the weak Japanese yen is good for Japanese exporters and Japanese investors overseas, and it helps the large group of foreign visitors who go to Japan and can have more purchasing power, which means they can spend a lot in Japan, all of which helps the Japanese economy.

Have a nice day!

Japan Business Confidence Improves: Updated Dec. 19, 2024.

 

Japan big makers' confidence improves as auto output recovers: BOJ

Article Source:  https://mainichi.jp/english/articles/20241213/p2g/00m/0bu/012000c

Ideas:

Business confidence in Japan has not been too good recently as  the Japanese economy has been stagnant for a long time. At the same time the Chinese economy is not doing too good and the US economy is going to be very uncertain with the new administration coming in soon.

In today's global climate with all or many countries, including China interlinked, protectionist trade policies are not good for any country or economy, so it remains to be seen how the new trade policies will be implemented in the future.

The Toyota group situation a while back has taken some time for all concerned to get back to some kind of normal or new normal from the fall out related to Toyota and its subsidaries.

Most likely the Toyota group or some of those responsible for the testing situation might have been under a lot or pressure to pass the cars in the testing as Toyota wanted to keep production on schedule and didn't want to fall behind.

But in the end they still feel behind with having to halt production on three of the models affected in the testing situation.

Business confidence is a murky area, as you sometimes don't know really what companies are thinking or what they are going to do in the future, as they might say one thing in public but keep their real feelings quiet related to the future.

Those who benefitted the most in the resumption of the three models as Toyota were the parts makers who might be parts suppliers and rely heavily on cars companies to order parts from them, and most likely many of these companies are small and mid-size companies.

The services sector is a mix of a large group of sub sectors, such as the hotel sector, the restaurant sector, the entertainment sector, the dept. store sector and so on, so its hard to identify exactly which were positive and which were negative related to the service sector sentiment.

Most likely as inflation has continued to affect the Japanese economy, the hotel sector and maybe the restaurant sectors were somewhat positive as maybe they has solid sales related to foreign tourists in Japan, while the the other sub sectors might have seen less consumer spending from regular Japanese consumers has the limited their spending.

At the same time, even though there were many foreign tourists in Japan, at record numbers the hotel sector has had a lot of challenges related to increased wages and labor shortages, as their profit margins might  too thin for wage increases and as there is a labor shortage now in Japan they can't attract workers if they can't meet the wage demands of the potential workers as they have many choice to choose from.

At the same time, as there are many hotels to choose from in Japan, hotel prices might be elastic for consumers, as if the price is not to their liking they can easily find a different hotel online.

Also maybe many hotels are reluctant to pass-on their price increases to their customers as again, they are worried about potential customers choosing other hotels, due hotel rates that they might not like.

The US dollar trading at 146.88 compared to 145. 15 could means millions of dollars depending on if a company is an exporter or an importer, as Japanese export companies benefit from a weaker yen while Japanese importer do not benefit from a weak Japanese yen as their import prices go up.

The Bank of Japan will make a decision based on both internal and external data for its next move. 

Even if all of the data is in line, internally, the BOJ might look at the external data as being more important as Japan is heavily dependent on the US economy and the Chinese economy related to exports and imports.

There are many factors that the BOJ will use to decide on a rate increase as they might rank all of the factors as to which ones are more important for the Japanese economy than the other factors.

Before even before they get to the meeting they might have made up their minds as to what to do, and the meeting might just be a formality to just review what they know and what they are going to do.

The Japanese economy might be gradually improving but its said before as one quarter its improving and then the next quarter it becomes stagnant again. 

It seems the BOJ has not really done much related to foreign exchange rates, as it seems the BOJ wants to keep the Japanese yen weak, as it helps Japanese exporters, and Japanese foreign investors, and of course the weak Japanese yen, has brought in record numbers of foreign tourists who spend a lot in Japan.

The BOJ is always concerned about what the financial market think and they are going to watch very carefully how the markets react to the Fed meeting just before the BOJ meeting.

Once again, sometimes you can't figure out exactly what companies are thinking and especially they might be positive or might be negative.

 Have a nice day!

Japan Tax Threshold: Updated Dec. 18, 2024

 

Debate over raising 1.03 mil. yen tax threshold gains steam in Japan

Article Source:  https://mainichi.jp/english/articles/20241210/p2g/00m/0bu/030000c

Ideas:

If the tax threshold is increased that might mean more hours for part-time workers, which might help some with the labor shortage in Japan.

There might be some or many part-time workers in Japan with families and or are considered low-income workers who need a way to earn a living wage and or income to not  be in the poverty zone.

Japan needs to help its part-time workers work more hour which can help with the labor shortage. If more part-time can work more hours, and of course not have to pay taxes that can help a lot for part-timers.

Japan needs to increase the special tax exemption for dependents as they too can contribute  to the householders in Japan.

Japan needs to find ways to keep people working and reduce the labor shortage. If not then the part-timers will not increase their hours and the labor shortage will continue. 

Of course if all part-timers were able to increase their hours that doesn't mean the labor shortage in Japan will lesson, but it will go a long way to helping some companies with labor shortages.

An increase from 1.03 million yen to 1.78 million yen is a large increase in income which can help a lot of part-timers in Japan, and maybe even help some with consumer spending in Japan.

Maybe if Japan increased the minimum wage in Japan that might help too as again, there might be some or many families with part-time workers such as women with children who can only work part-time and need to take care of their young children.

Japan might have one of the lowest minimum wage rates among advanced developed nations still as they need to increase the minimum wage to help low-income workers.

There might be many income barriers in Japan at this time, as maybe some of the barriers might be 20 century ideas and not 21st century ideas.

And yes increasing Japanese people's disposable income might help with consumer spending in Japan, as spending in Japan is not where it should be at this time.

And it might help with the labor shortage but its not going to completely eliminate the lavor shortage in Japan.

Yes, there are many things that could increase inflation, but at the same time, they might not have that much of an affect on inflation.

Increasing the tax threshold is needed in Japan, as Japan needs all the help it can get to increase disposable incomes along with the possibility of increasing consumer spending.

If peoples tax revenue is decreased it might help with their disposable income along with increasing consumer spending, which can help with tax revenues as consumers pay a sales tax on things they buy in Japan.

Governments should stop playing games with peoples lives and work together for the good of the people. 

Just as wage increases for Japanese workers help with increasing their disposable incomes, so too should the tax threshold be increased to help part-timers too with their disposable incomes.

What Japan, at this time, doesn't need is another sales tax increase which will, again, like in 2014 an 2019, decrease consumer spending in the Japanese economy.

What they are not looking as is the possibility, again, of increased disposable incomes among low-income workers, which might be some college students but some or most of them could be working women with children who can only work part-time because of their young children.

The Japanese government, like they always do can supplement any loss in revenue as they have done many times before in Japan.

Its time for Japan to join the 21st century with tax plans and a minimum wage that is befitting advanced countries like in the Northern European countries such as Norway, Finland, and Sweden along with Denmark who have good plans for their citizens.

Its not easy to decide which is more important, the local governments need for continued revenue or helping the large part-time population in Japan.

The Japanese government needs to set some priorities and find ways to fund those priorities without leaving anyone behind in the local areas or the again large part-time work population in Japan.

One possibility is to increase the minimum wage and maybe not increase the threshold tax and that might be enough, or increase the minimum wage and increase the threshold to maybe 1.58 instead of 1.78.

When these thresholds were set-up maybe the cost of living or inflation back then was not a major challenge but today inflation is hurting everyone, and part-time workers need help just to pay their bills.

Sometimes Japan moves very slow and this might be one of those situations where the tax threshold, which might have been created decades ago, are just not relevant today, as again, the inflation level was much lower along with the overall cost of living in Japan.

If Japan was to be a real advanced economy again, it needs to find ways to help all of the part-time workers who might need and want to work more but can't because of the tax threshold. 

Just what kind of supply shortage is the economist thinking about as Japan is a resource poor country and already imports much of what it needs, so there will be no real change if a tax cut is implemented, which has happened already many times in Japan the last few years.

Implementing such as step might not be any worse than what is happening now as Japanese households suffer from high inflation and prices which are passed-on to consumers as imports are increased due to the weak Japanese yen.

Consumer spending in Japan has already slowed and has been slow for a very long time, so any new programs, such as the need to help low-income workers and or part-time workers is not going to cause the side-affects that some fear.

And the Japanese government, as needed, as usual, can and will help local governments with further supplements so that all can be taken care of in Japan, at the same time.

Have a nice day!