Japan's real wages down for 2nd straight year in FY 2023
Ideas:
Maybe its not doable but companies should increase wages on a monthly basis and not just in April, the beginning of the new year. Of course Japanese companies are not directly responsible for inflation except for the increase in prices in Japan by most companies. And of course most Japanese companies can't afford to increase wages every time inflation increases or companies would go bankrupt.
The real challenges seems to be the Japanese yen and imports as imports prices remain high and import companies have to pass-on their costs to the next in the supply chain, which might be the final customer eventually.
And then there is the variance between the US key rate and the Japanese key rate, which keeps the Japanese yen weak, as the US rate is around 5.5 percent and the Japanese rate is around 0.
wage increases need to be offered by all companies or as many as possible, for example large companies, midsize companies, and small companies too. If not there is going to be, if not already, an economy of haves, meaning large companies workers and have nots meaning midsize and small company workers who didn't get a wage increase or not as much as large company workers.
And yes, small and midsize companies might not have the resources that large companies have and their profit margins just can't afford wage increases compared to large companies.
Of course in a market economy there are always going to be some better off, large companies and those not so better off, small and midsize companies, who don't have the resources of the large companies.
The Prime Minister can pressure companies but companies don't have to follow exactly what the Prime Minister asks as its only a suggestion and not a law, and maybe many companies still have weak profit margins and maybe don't have any room for the size of wage increases the Prime Minister is suggesting of 5% + wage increases.
Nominal wages are not the most important indicator as real wages tell the real story and they show what the effect is on the average Japanese workers.
If for example if inflation was not as high or continuous and the Japanese yen was not as weak, and the US rate and Japanese rate were close to being equal, then the Japanese economy might be more calm and relaxed and companies then could easily increase wages as needed to meet the Prime Minister's suggestions.
Most Japanese households probably still feel inflation and are still cutting back on some things in their budgets as maybe consumer sentiment, or consumer feeling is not so good right now, meaning Japanese consumers are not spending as much, due their the downbeat feeling, continued inflation, and a decrease in real wages.
But that seems to be the nature of the Japanese economy, as is it never reaches its potential and consumers spending, being about 50% of the Japanese GDP is never where it should be in the 4th largest economy in the world.
You would think the younger generations of Japanese workers would be the big spenders in the Japanese economy, but that is not what is happening as pensioners are leading the way in spending in the Japanese economy, as a recent article suggested.
As indicated, the challenges is not nominal wages for full-time workers at 438,696 yen, but the real challenge is the sad state of affairs for contract workers and part-time workers in Japan at 105, 989 yen.
There might be a significant set of the Japanese population that work either part-time and or contract work at lower wages than full-time workers.
Unfortunately, maybe many Japanese companies have adopted western style business practices and have used contract workers and part-time workers a lot as a way to reduce costs in their companies.
Its not good for the Japanese economy, or any economy, or society, which just uses a lot of part-time workers and contract workers as an economy can grow to its maximum without normal wages.
Have a nice day and be safe!
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