Japan Small, Mid-sized Firms Offer Wage Increases: Updated June 9, 2024.

 

Japan small, mid-sized firms offer 3.62% pay hike, below major firms

Article Source:  https://mainichi.jp/english/articles/20240608/p2g/00m/0bu/014000c

Ideas:

Its not unusual that small and midsize companies don't or can't match the wage increases of the larger name brand companies in Japan, as they don't have the same resources.

The 3.62 percent, while better than nothing, probably doesn't offset the continual inflation increases over the last few years in Japan, which means small and mid-size companies employees are still going to deal with continued inflation.

And again, the Japanese economy, is going to be an economy of haves and have nots, but in reality, that is all market economies as not everyone makes the exact same salary, as there those who get higher salaries and those who only get minimum wage.

Real wages are the key and most likely maybe even the large name-brand companies didn't increase wages above the inflation level so real wages are still not what is needed in the Japanese economy at this point.

The weak Japanese yen, and import prices for everyday things in Japan are the main challenges that Japanese households have to deal with. Again, as real wages are not enough, Japanese households have to pick and choose what to buy and what not to buy to meet their current budget situation.

This situation has been a 20+ year situation going all the way back to the early 2000's when Toyota decided not to increases wages, as the corporate leader among name-brand companies in Japan, all other companies had to do the same thing, and or as the saying goes "the nail that sticks out will be nailed down" meaning all companies had no choice but to follow what Toyota did in the early 2000's.

Of course any wage increase is good and needed, but of course more would have been better. And yes, now the smaller companies will need to pass-on their increased wage costs to the next in the supply chain including the companies that they are suppliers to meaning supply costs will begin to increase.

Many, but not all small Japanese companies are actually suppliers to large Japanese companies and they are not usually in a very good position, as some large companies might try to reject the price increases of the smaller companies and may even put pressure on them like it was reported related to Nissan, whether true or not.

That could be one of the main reasons small and mid-size companies, which might be suppliers to some larger companies are unable to increase wages as if they do, and they try then to pass-on their wage increases in prices, large companies might put pressure on them to not do it.

There is a definite labor shortage in Japan, and many companies now are increasing wages as a way to entice workers to change jobs, and of course to not change jobs and stay in their current job.

The service sector, which was hit the hardest during the pandemic, might also be increasing wages as a way to get former employees to come back and or just to get needed employees who left during the pandemic.

Companies might feel they have no choice but increase wages despite the not so good economy and or not so good business performance, as if they don't employees maybe leave and go to a company that is willing to pay higher wages.

Some or many companies don't have labor unions, as maybe there are positives and negatives related to some labor unions.

Part-time workers and contract workers are usually left out of wage talks and they aren't even considered important enough the be considered. But Japan seems to have more than its share of part-time and contract workers and now maybe they are finally being considered, not completely as stakeholders but now maybe a part of the company and can't be ignored.

Again, there are definite labor shortages in Japan and maybe the wage situation might be part of the challenge, as maybe some workers don't want to work for wages that not meet their expectations, such as Japanese university students and working for convenience stores that might not pay what they want or need.

The workers of 30 so years ago are long gone, or the mindsets of the workers back then are long gone, as workers today don't want do the same work definitely don't want to work for low wages offered, so companies are beginning to see and understand they have no choice, to get the best possible workers, or even to get workers period, they need to increase wages.

Have a nice day and be safe!