Bank of Japan Rate Increase: Updated August 18, 2024.

 

Bank of Japan hikes rates to 0.25% in push toward normalization amid weak yen

Article Source: https://mainichi.jp/english/articles/20240731/p2g/00m/0bu/032000c#cxrecs_s

Ideas:

The Bank of Japan has been very hesitant to increase the key rate for a very long time, citing the idea that the Japanese economy was just too weak for any rate increases.

The only real weakness in the Japanese economy has been slow economic growth related to not so good or consumer spending not reaching its fullest potential.

As the Bank of Japan has now increased the key rate, what will the affects be in the future with consumer spending, business investments, and so on, and will Japanese banks actually begin to make a profit again.

The Bank of Japan is not going to increase the key rate if the Japanese economy, this summer, doesn't show much growth potential, and or there are rumblings in the Japanese and global stock markets related to the US economy.

Also, wage increase have yet to be be seen in the Japanese economy, or not that much yet, as maybe Japanese consumers are either waiting on what do to or maybe saving some and not spending much yet.

Price increases, aside of the weak yen, and or increases in import prices, will depend on an increase in demand in the Japanese economy, as maybe consumers will begin to spend and then companies will begin to increase their prices.

Now might be the correct time, but depending on who, businesses and or consumers they might see things differently, as any increase in the key rate increase loans, which might not be that good for some in the economy.

The 2 percent inflation target has been there for a long time, but inflation has been more than 2 percent, in Japan, ever since the pandemic, and maybe not going to be reached in 2024.

The US Federal Reserve, or the US central bank, might decrease rates and maybe eventually, the US and Japan key rate will get more closer to normal, for each.

Yes, its at the low level, and most likely no one is really going to notice anything different in the Japanese economy, at this time, until the key rate increase the level where consumers and businesses will be begin to feel the rate increase.

It might be good for the Bank of Japan to reduce its bond buying as a way to wean the Japanese economy off of government debt, which is highest among advanced countries at this time.

But, at always, whenever there is an emergency governments begin to buy and spend even more

The Bank of Japan has a long way to go to get its debt down, and it might take some time, if ever, to get it to a manageable level again.

But what it must not do, to cause harm in the Japanese economy or harm consumers or businesses in the process or reducing its debt.

It won't be easy for the Bank of Japan to reduce its debt after many years of spending as a way to prop up the economy, as has been normal for so many years in Japan.

The tapering process will depend on the stock markets and economic growth, as the Bank of Japan doesn't want to do anything that will cause harm to the economy. 

The Bank of Japan also doesn't want to have too many side affects that might hurt the economy such as a key rate increase that is too much for the economy.

For many years the Bank of Japan has been very cautious about anything that would cause harm and or too many negative side affects.

Unfortunately, what the Japanese public thinks and businesses too, is not what the government or the Bank of Japan thinks.

For example, the Japanese public and businesses feel the economy everyday and don't really think about policy or this or that, they just live it everyday.

Again, there might be a transition taking place, but until the Japanese public feels any changes they might not see or feel anything.

There positives and negatives to higher interest rates, and banks can improve profitability and consumers can get more for the bank savings too which can help the economy.

But there has to be a balance between savings and spending in an economy, and too much of either is not so good.

But Japanese consumers, whether good or not so good, tend to save and not spend and that too might be a negative for an economy.

Private consumption or consumer spending might be improving but it has a long way to go to reach its potential., which is needed for the Japanese economy to grow.

Japan needs to right kind of inflation, which is related to consume demand and consumer spending, but right now the wrong type of inflation is a challenge for the Japanese economy, such a weak Japanese yen, and inflation related to increased material and energy prices.

Yes, there is still some distance to go before Japan reaches the correct type of inflation. which they might not see in 2024.

An increase of 2.1 percent doesn't sound like much, but if you add that with other price increases it begins to add up and for some income groups it can become too much.

Projection estimates are good and needed, but an economy is too volatile or changes too much for any real projection.

Inflation might be around 2 percent in 2025 and 2026, but its too early to say exactly as the wrong type of inflation is still prevalent in the Japanese economy.

Economic conditions might not be there in the summer or even the fall as the Japanese economy is just not that strong yet. It might not be good until early 2026 or the summer of 2026.

The Bank of Japan is usually very cautious on many things and a rate hike will not happen unless all the necessary variables fall into place.

However, there might be a very small rate increase, as long as it very small and doesn't affect the economy too much.

Japanese households are not used to the type of inflation that hits the EU or the US, as Japanese households are used to decreased prices and when inflation did take affect right around the pandemic consumer spending might have decreased significantly.

Wage increases are good and needed, but its possible that many Japanese wage earners didn't get the same wage increase as big company wage earners, which could be a negative for the Japanese economy overall.

Private consumption or consumer spending in the Japanese economy is never where it should be, for example, consumer spending might only be 50 percent of Japan's GDP, but even then, it might be much lower if Japanese consumers don't spend because of inflation and or decreased consumer sentiment or feeling about their wages or inflation.

Have a nice day and be safe!

Bank of Japan Governor Ideas: Updated Aug. 2, 2024.

 

Bank of Japan chief denies rate hike would seriously damage Japan economy

Article Source:  https://mainichi.jp/english/articles/20240731/p2g/00m/0bu/051000c

Ideas:

There are always positives and negatives related to key interest rate hikes and decreases, depending on the sector or industry, and even households might react differently to rate increases.

The key interest rate increase will reduce the difference between the US rate and the Japanese rate, which has been a major reason for the weak Japanese yen.

But the Bank of Japan needs to be careful, and make sure the rate doesn't get too strong, as it might cause foreign visitors from not coming to Japan, as foreign tourism is now a major economic driver for the Japanese economy.

But its going to take many more Japanese key rate increases and or many US key rate decreases for the US rate and the Japanese rate to be near equal which makes the US dollar and the Japanese yen somewhat equal, which will help the Japanese yen to be less weak and stronger.

The 2 percent target might not be achieved anytime soon, but its still a good target to strive for as a 2 percent inflation rate is maybe a good number for the Japanese economy, as there are many senior citizens who live on fixed incomes and anytime there is an inflation increase it could significantly affect them, and of course all in the Japanese economy.

Japanese banks might feel as sense of relief as now they might be able to have higher interest rates for their borrowing situation, which means they now can make more profits instead of the zero rate that they to have for many years.

The need may exist for another rate increase sometime in the fall, but its going to depend on what happens with consumer spending and business investment spending in the future months.

If the April wage increases don't begin to affect the Japanese economy with Japanese households spending more in the summer the Bank of Japan might delay the rate increase until sometime in 2025.

The Japanese economy, while a very stable economy, with few shocks, its a very stagnant economy and doesn't really grow that much which puts a lot of pressure on the Bank of Japan, to rely on exports and foreign tourism to grow the economy, as domestic consumer spending doesn't seem to be much or not as good as it should or could be compared to the US and the EU.

Have a nice day and be safe!

Japan, Exports and Economic Recovery: Updated August 13, 2024.

 

Japan gov't cuts view on exports, keeps economic recovery scenario in July

Article Source:  https://mainichi.jp/english/articles/20240725/p2g/00m/0bu/033000c

Ideas:

This the problem with any economy that relies on one sector for economic growth, as if it decreases, the economy decreases, japan has relied on exports and a major economic driver, and there is not much else, as consumer spending seems to be that strong in Japan.

Japan has tried to rely on foreign tourists, who spend a lot in Japan, but its not enough to really improve economic growth.

Consumer spending, in many advanced economies, is more than 60 percent of GDP, but in Japan its only around 50 percent.

China seems to be going through a major transition at this time, and its economy might not be back to normal for a while.

Unfortunately, the Japanese economy is always up and down and never grows that much each quarter, but at the same time, its a very stable economy and unless there is a major earthquake or something it just keeps moving, but at a very low rate.

The demand for cars in the US will continue to be strong despite some low periods here or there, but , again, Japan is probably too focused on the US market, but of course the Chinese market is lagging behind at this time, and the EU is still not so good too.

Pausing for a pick up is a good way to say things are slow now but will pickup soon, which is normal as even demand for cars is not always strong, and sometimes slows down.

The Japanese economy, recently, is always described as recovering moderately, and to be fair, it never grows too much even in the best quarters.

Japan just came out of the Golden Week period, where there was probably a lot of consumer spending, and Japanese consumers are probably waiting for the summer Obon vacation period to start spending again.

Private consumption or consumer spending is always up an down, and of course now, with inflation still a major challenge in Japan, it might not be where it should be.

Business investment will be dependent on what companies can afford as maybe they are spending a lot on wage increases at this time.

Again, consumer spending or private consumption is not where it should be,  at 50 percent only of GDP, while other advanced economies are at 60 percent or more related to consumer spending, which means at 50 percent, it might not be enough to help the Japanese economy grow.

The residence and income tax cut was good and needed, but is/was it enough to help Japanese families as 40,000 yen is used up very fast with inflation, and its possible, maybe some or many Japanese families did not spend all of it in the economy and might have saved some of it.

It might take some time for wage increases to be felt by Japanese households and or for Japanese households how much of the wage increase to spend in the Japanese economy and how much to save.

The weak Japanese yen of course is a major challenge for most import companies who need to import products, and the weak yen increases import prices in Japan.

It must be remembered, that maybe 70 percent of Japanese workers don't work for large Japanese companies, and maybe 70 percent of Japanese workers didn't get large wage increase that large companies gave, as such the wage increases might not be a big part of the Japanese economy as expected.

The global economy is like one large economy, as there are many economies, like sectors in a country, that are doing good and some of course that are not doing as good.

While China might be having some challenges at this time, the US economy seems to be doing much better and the EU, well the EU is the EU and doesn't do much lately.

Recently, the last two weeks, it was suggested that the Bank of Japan is not going to increase the key interest rate, when the financial markets are unstable, which they have been recently, as the key interest rate increase might be a major challenge for many in the Japanese economy.

Have a nice day and be safe!

Japan Labor Shortage and Bankruptcies: Updated August 6, 2024.

 

Increasing staff costs driving 'labor shortage bankruptcies' among Japan firms

Article Source:  https://mainichi.jp/english/articles/20240725/p2a/00m/0bu/009000c

Ideas:

Its a very unfortunate cycle of events that have taken hold in Japan, as inflation with the weak Japanese yen, along with now labor shortages have put many small companies in the bankruptcy segment, and there doesn't seem to be any improvement in the future.

Yes, workers need higher wages to take care of their families and pay their bills and feel like they are making a normal wage, but also many companies, might want to increase wages, but their profits margins are so thin, even a small wage increase can affect them, much like a low-income family and any emergency or increase in inflation is a disaster for them.

Its sad that many services companies can't hire workers because they can't afford the minimum wage and or can't afford to pay anything good that will attract workers to their company.

There doesn't seem to be any solution to the situation other than the Japanese economy grow significantly where many sectors, including and especially the services sector can see and feel significant economic growth, but unfortunately, the Japanese economy doesn't seem ready to grow that much.

The Japanese government, before this becomes as crisis, needs to step in with a program that can help these small businesses to overcome the situation. That doesn't mean they carry these businesses but they help them with loans or whatever and maybe help them become more innovative, if possible help them with improvement of their labor situation.

The Japanese government could setup a plan for small companies and, if possible. provide half of the minimum wage to companies and then companies pay the other half. This is similar to what South Korea did when it started to increase the minimum wage, and in that way small companies didn't have feel completely stressed with the wage increase.

But overall many South Korean small and midsize companies either reduced hiring, limited hours, and or went to using robots whenever possible.

Unfortunately, in a market economy bankruptcies are normal, but too many of them can be  crisis for an economy, and Japan might be headed for a crisis unless the Japanese government can find a plan to help small companies.

One option, but time consuming is to bring in foreign labor to work in small and midsize companies, but there is the Japanese language challenge for many foreign workers in Japan.

The idea of the Moon administration in South Korea, was to help minimum wage earners with a livable wage so they could take care of their families and pay their bills, and maybe have some extra income to spend in the South Korean economy.

But of course many small companies were not ready for the minimum wage increase and many companies either, again, reduced hiring, cut hours, and or tried to innovate, if possible with robots.

Sooner or later Japan is going to have to increase wages, minimum wages, but maybe not follow the South Korean example of increasing wages every year like they did, but spread out the wage increases so that companies can prepare and innovate, and at the same time, the Japanese government provide incentives for small companies.

Small Japanese companies need to be flexible as much as possible, find ways to innovate and be more productive, but of course, unfortunately, many small and midsize companies don't have the flexibility to do anything, and the wage increase is just another stress they have to deal with regarding their business.

Again, the Japanese government should setup programs that can help small businesses innovate and become more productive, even though such programs might already exist in Japan.

If nothing it really done the Japanese economy could be facing a small business crisis that could further hurt the economy from growing again.

An economy can't exist on large name-brand companies only as all economies need small businesses to grow and succeed, and most advanced economies were not built on large companies but the thousands if not millions of small and midsize companies.

Have a nice day and be safe!

Japan Minimum Wage Increase: Updated August 3, 2024.

 

Japan gov't panel OKs sharpest minimum wage rise amid inflation

Article Source:  https://mainichi.jp/english/articles/20240725/p2g/00m/0na/002000c

Ideas:

Minimum wage hikes are good for workers but not so good for companies, as many of the companies are small companies with few resources and or service companies with limited or very thin profit margins. So maybe a 50 yen increase in the minimum wage might be too much for many companies.

But for workers even a 50 yen increase might not be that much as inflation can eat that up in one day, as the minimum wage needs to be higher, but like some countries the minimum wage it not that much.

Unfortunately, minimum wage workers, might not be the most talented or the most skilled in the work force in Japan, like other places in the world, but they might have families or bills to pay and the minimum wage doesn't go very far.

There has always been a debate related to the minimum wage as many companies around the world don't want to pay that much, and Japan is no exception to the situation, as again, the minimum wage worker might not be the most talented or the most skilled but they provide needed work for an economy.

Inflation will always outpace wage increases as companies are very reluctant to increase wages and they have to have an incentive to increase wages. Look how long its taken for Japanese companies to increase wages ever since the Toyota group effect in the early 2000's that said no wage increases and then all companies did the same thing.

Service companies might always be the last group to increase wages, as their profit margins are very thin and they really can't afford to give the needed wage increases, as most of the workers might be contract or part-time workers.

Real wages are more important than nominal wages as Japanese workers feel the affects of real wages against inflation, as the value of real wages can diminish with inflation increases.

The minimum wage in Japan, is much lower than other country's minimum wage, as maybe the minimum wage worker is not as valued as an worker as in other countries.

Most likely, many of the minimum wage workers, in Japan, might be women who have children, and can only work a few hours each day, and of course maybe students who can only work too a few hours a day.

Each Japanese prefecture might set it minimum wage based its overall economic activity, as of course Tokyo and Osaka might have the most economic activity and their minimum wage might be the highest in Japan, while the smaller provinces which are more rural, with less economic activity might have a lower minimum wage.

Which of course might be one of the reasons many young people in the rural provinces are leaving and moving to the more economic active areas of the country, where the wages are much higher, even for minimum wage workers.

The minimum wage situation is neve going to be solved as long as companies are reluctant to give good wages to the less talented and or less skilled in a society or economy, as it going to always be an issue.

Have a nice day and be safe!

`Wage Increases and Productivity: Updated July 28, 2024.

 

Calls for wage raises as Japan not achieving textbook productivity-led wage growth

Article source:  https://mainichi.jp/english/articles/20240722/p2a/00m/0bu/030000c

Ideas:

Economic textbook ideas are not always followed exactly in the real-world of life or business or society, as there are just too many variables interacting at the same time. Productivity might be improving in Japan, as everywhere, but that doesn't mean wages are going to increase or will increase in the future.

People, CEO's, decide on wages and as such even though productivity in a company might be increasing, that might just mean higher profits, but not an increase in wages, as unfortunately, the average Japanese worker, just like many countries, are just commodities and not real stakeholders in a company like it was in Japan decades ago, as Japan has adopted western style governing which put the shareholder at the center and company workers at the fringes.

Wage growth in Japan might be decades behind Germany and the US, as again mentioned, the early 2000's situation in Japan, when Toyota decided not to increase wages and then all companies did the same, and its been that way ever since until 2023.

And yes, as the article states, shareholders became more important than the Japanese worker, and even though productivity had increased, the emphasis now was on shareholder earnings and again the worker was not given wage increases and the idea was take care of the shareholder and not the worker.

It has been said, that many Japanese companies, especially the big name-brand companies are sitting on a lot of cash, that they could use to increase wages, but ever since the 2008 situation, they have been afraid to use the cash.

Maybe back then, in the 2000's and a little beyond, there was no labor shortage like today, and now companies have to increase wages to get new workers and to keep current workers, as workers now know they might have some bargaining power with regard to increased wages. Before workers had no bargaining power as there more than enough workers for companies and they could pay whatever wages they wanted.

For wages and productivity  to increase in sync all factors need to be lined up correctly, and that, again, is very hard to do. Just like the idea of decreasing inflation and increasing wages together, as there are just too many negative factors affecting the Japanese economy at this time, and its going to take some time for all the pieces of the puzzle to be arranged correctly for wages and productivity to be congruent again, if ever.

Most likely, companies are going to focus on increasing productivity as it helps increase profits which is good for the shareholder, and companies might, as in 2023 and 2024, increase wages, but not to the benefit of the worker, as such, but just to make sure there can avoid a labor shortage.

Today's labor talent, of young workers young college graduates are not the same kind of worker as their parents were and they want and need a different work experience. If companies don't adopt and change, to meet the needs of the 21st century worker, they will continue to have labor shortages, as young workers will easily quit and try to find a companies that meets their needs.

Its a losing proposition, these days, if companies expect young workers to change for the company, as they are not going to do it, as companies need to change from an old-style traditional company to a 21st century company that embraces the 21st century worker.

That doesn't mean the Hollywood style as seen related to tech companies but meeting the needs of the 21st century worker but still being productive and competitive in a global economy today.

Have a nice day and be safe!

Japan Core Consumer Prices: Updated July 23, 2024.

 

Japan's June core consumer prices rise 2.6% on higher energy

Article Source:  https://mainichi.jp/english/articles/20240719/p2g/00m/0bu/018000c

Ideas:

Inflation and Japan's core consumer prices will continue to be a major challenge for the Japanese economy, as Japanese households will continue to have less and less extra income to spend in the economy.

Even though the Japanese government tired to soften prices related to energy costs, a government can't do everything forever, or always as there is just so much money to be used.

Real wage growth is going to be the real challenge in the Japanese economy, as real wages are probably going to be less than inflation in the long run.

The Bank Bank of Japan 2 percent target might be unrealistic as this time as inflation continues on in the Japanese economy, and maybe its time to just set it aside for now until inflation decreases.

Japan is a resource-poor country and has to import much of what it needs including energy commodities. As a result, it it subject to global energy prices and also because the Japanese yen is weak imports prices continue to remain high.

Even if Japan imported raw energy materials such as oil and gas, and then refined them for commercial consumption, it would still need to pay for the raw energy commodities to be refined in Japan.

If Japan hasn't done it yet, they need to have some energy free trade agreements with energy producing countries as a way to reduce energy prices in Japan.

Consumer sentiment among Japanese consumers never seems to be that strong compared to other countries such as the US, as Japanese consumers, for the most part, just don't spend the same way as US consumers.

Wage growth or wage increases in Japan only happens once a year in April, except for twice a year bonuses that some Japanese workers might get.

As such inflation seems to increase monthly or at least quarterly or every three months, which means wages are not keeping up with the increase in prices or inflation.

This summer in Japan, and even now in July or even earlier like the spring, the temperatures in Japan are at record highs and it could last well into September or even October.

And again, a government can't do everything as there is only so much in a government's budget, but for the good of society, governments should do what it can, such as reinstating energy subsidies, especially for the lower-income families and middle class families in Japan.

Private consumption or consumer spending is not going to be strong or robust anytime soon as long as inflation outpaces wages in Japan. Even though wage increases were around 5 percent in April, as maybe many Japanese workers didn't get the same wage increase as the large company workers did.

Inflation might not be a major challenge for some in Japan, but if there is constant news about inflation and prices, then consumers begin to cutback on their spending as all they hear about is the increase in prices.

Service type companies were hit the hardest during the pandemic and many had to either close, reduce hours, or cut their staff.

So now service companies might be increasing prices as a way to makeup for lost profits during the pandemic, and or course as there might be increased demand they might be increasing prices even more.

Now add in labor shortages in Japan, maybe some or many service type companies might be increasing wages as a way to attract needed workers and or to keep the workers they have from leaving and going to better paying jobs.

Goods prices might have begun to level off or not increase that much, unless you add in companies passing on their wage increase costs to the next in the supply chain including the final consumer.

Service costs are a different story, as maybe there is now strong demand in the Japanese economy for services and as such service companies are going to increase prices as demand increases.

And, again, as service companies increase wages to keep or attract needed workers, they are going to pass-on their cost the the next in the supply chain, which in this case is the final consumer.

Private consumption or consumer spending, which might be 50 percent or more of Japan's GDP, is just not that robust or strong at this time, and its going to take some time for inflation to level off and for wage increases to take affect in the Japanese economy.

The Bank of Japan most likely is not going to increase its key interest rate at this time, as the Japanese economy is still just too weak or too stagnant for a rate increase, as a rate increase might have too many side-affects that could delay wage increases helping the Japanese economy.

Have a nice day and be safe!

Japan GDP Growth Outlook: Updated July 26, 2024.

 

Japan gov't cuts GDP growth outlook to 0.9% from 1.3% in FY 2024

Article Source:  https://mainichi.jp/english/articles/20240719/p2g/00m/0bu/030000c

Ideas:

There is nothing new related to the Japanese economy as 0.9 percent economic growth is about what the economy has done in recent years.

Private consumption or consumer spending has always been weak in Japan as Japanese consumers just don't spend like US consumers. And add in the continued inflation situation and it gets worse and add in the weak Japanese yen, with imports continuing to be high.

Consumer spending, as indicated might be 50 percent of GDP but the numbers don't show it as Japanese consumers don't seem to spend that much recently.

The Japanese auto industry situation might not be that bad as demand for Japanese cars in the US remains strong.

Economies always go through ups and downs and Japan is no different, but, recently, there seems to be more downs than ups. At the same time, an economy is very complex, as there are many sectors or industries in an economy, and they usually are not all positive at the same time, as some might show growth and some might show negative growth, while some might show no growth and just stagnant.

Domestic demand is always a challenge in the Japanese economy, as Japanese consumers, have been hit hard, recently, with increased inflation, which cuts into their extra income to be used in the Japanese economy.

Japanese auto production, even though there might be a controversy with improper data, US demand for Japanese cars is still very strong and most likely will remain strong through 2024.

To be fair, how can wage growth keep up with inflation and for the most part a 5% percent wage increase is good, but can't compete with inflation that increases almost every month in Japan.

Yes, a 5% wage increase is for every month, but add in inflation that keeps increasing every month, as the extra income from the wage increase is not that much or even disappears over time.

The weak yen makes is both a positive and negative for the Japanese economy, as it helps Japanese exporters get extra profits but it hurts Japanese importers, as imports prices are inflation, due to the weak Japanese yen.

The Japanese government can't do much but they can use price controls, as needed on some basic items to help Japanese households, by maybe putting a freeze on prices on some items in the Japanese economy. The price freeze doesn't need to be permanent, just a short-term freeze until inflation is under control and or the weak Japanese yen, gets a little stronger.

All of the above ideas related to energy subsidies are good and needed, but what about the basics related to food, and maybe there should be a freeze on prices related to food.

A government can't do everything, but like in the Northern European countries, they seem to have been able to meet the needs of most of their citizens. Japan maybe should be more like the Northern European countries and less like the US.

The Japanese yen situation is very complicated as a weak yen helps some in the Japanese economy but hurts some in the Japanese economy. The Bank of Japan has to manage both sides of the economy, as much as possible, to try and find a mid point that contributes to both sides of the economy.

Deflation might have been good for some in the Japanese economy, but not so good for some in the economy, as profits might have been too stagnant for too long.

And of course, for a very long time, it seemed like wage increases were not much, if even at all, might have been a challenge for Japanese households and spending in the Japanese economy, as there was very little or no extra income to use in the economy.

Forecasts are always needed and important, but rarely are they correct, due to many variables interacting at the same time in an economy. So if its 2.5 or 2.8, whichever, it might be good or it might be not so good.

But if its 2.8, for consumer price increases that means Japanese households have to deal with increased inflation, again, through 2024, and again, less extra income available to be used in the Japanese economy.

Nominal GDP is not the same as the real GDP, which should be the real target as nominal also includes inflation in the economy. 

The real GDP is what affects households more than nominal and it shows the real amount of economic activity in an economy, without inflation included.

Of course nominal shows how much inflation might be affecting households and so on, but the real GDP is what matter for Japanese households.

Have a nice day and be safe!

Workers and Wage increases; Update July 20, 2024.

 

Only 6% of workers in Japan say wage hike rates larger than price increases: poll

Article Source:  https://mainichi.jp/english/articles/20240717/p2a/00m/0bu/013000c

Ideas:

The problem is, wage increases are only a one time increase, usually in April, but inflation seems to increase monthly. So even if wage earners might have got a 5% wage increase inflation might have increased monthly, which means inflation most likely, in summary, was more than the 5% percent wage increase.

Part of the problem might go back to the beginning of the 2000's as many companies, back then, didn't give pay increases until maybe 2023.

It must also be remembered, that maybe 70 percent of wage earners in Japan don't work for large name brand companies and work for small and midsize companies, which might not have had a 5% percent increase, but much lower, if any at all.

The respondents in the survey might come from large array of workers in different size companies, and again, small and midsize company workers might not have gotten the same wage increase as large company workers.

Every worker or Japanese household is different and they see pay increases differently according their needs and wants. Some might see the 5% percent, if they got that, as good, while some might see it as not enough that barely covers their monthly expenses, or gives them little or no extra income.

It must be remembered, again, that between April of 2023 and April of 2024, inflation in Japan increased a lot. Even if inflation each month was not that much, if you add up each month, most likely it was more than 5%, which makes the 5% wage increase not so good.

Only 5% of non regular employees said pay increases were larger, which is not that large and not surprising, as maybe many non regular employees might not have gotten a wage increase at all.

But only 7.3% of regular workers said wage increases were enough, which means maybe 86% felt wage increases were not enough compared to increases in inflation.

Most likely those in the 20's and 30's have less financial responsibilities than the older groups and maybe the wage increase gave those in their 20's and 30's more extra income.

And as expected, those in their 50's and 60's with more financial responsibilities felt wage increases were not enough and didn't give them enough extra income compared to price increases.

And yes, as expected, unfortunately, over 70% in the 50's and 60's felt wage increases were not enough to cover the price increases and or didn't increase their extra income.

Yes, the overall wage increases either have not take affect and or Japanese workers, at this time are just sitting on the wage increases and deciding just what to do and maybe many ar still weary of the inflation situation.

For non regular employees its very different story, as they are constantly stressed out by their low wages and or company benefits or a combination of factors.

Yes, some companies might have given good wage increases for non regular workers, but that is not the case with all companies who see non regular workers as just nonessential commodities that can be easily replaced.

The minimum wage situation in Japan, unfortunately like some economies is not so good, as many companies don't want to pay a lot for some workers and they keep the minimum wage low, as companies try to limit their costs.

Have a nice day and be safe!

Japan Trade Deficit: Ideas Later: Updated July 21, 2024.

 

Japan's trade deficit halves in 1st half of 2024 on strong exports

Article Source:  https://mainichi.jp/english/articles/20240718/p2g/00m/0bu/020000c

Ideas:

As Japan is heavily dependent on exports, its seems that maybe because of the pandemic it had a significant trade imbalance after the pandemic situation.

Also contributing to the trade deficit might have been a weak Japanese yen, which inflates import prices in Japan, as Japan is resource-poor country and has to import much of what it needs from food, raw materials, and energy.

Japan seems to have built its economy on exports as maybe international trade takes priority over the domestic economy, or it seems that way.

As the Japanese domestic economy doesn't seem to grow that much, exports and foreign visitors going to Japan seem to be the two main economic drivers for the Japanese economy.

An economic driver is any economic activity that significantly increases economic growth and the overall domestic economy, outside of these two economic activities, there doesn't seem to any other solid economic activities that might be good for the Japanese economy at this time.

Foreign visitors, which is now at a record high spend a lot in Japan, as the weak Japanese yen, gives them more purchasing power which means for their respective county's current the weak Japanese yen, helps them spend more in Japan, which, again, significantly helps economic growth in Japan.

Japanese auto exports, or the Japanese auto industry, again seems to be leading the Japanese economy, as again, no other industry, other than the foreign tourist industry seems to be improving much.

Economies always go through ups and downs and Japan is no exception, except it doesn't grow that much, if at all.

The Japanese economy is a very stable economy, as it doesn't have many or almost no sudden shocks or surprises.

The Japanese yen is a major puzzle that is not going to be solved anytime soon.

Unfortunately, whatever the reasons, and again, is very complicated, is not going to be solved anytime soon, as there are many factors related to the weak Japanese yen.

Again, the US economy seems, at this time, to the the world's leader in economic growth, which is good for Japanese exporters as there is strong demand for Japanese products in the US.

The same can't be said, at this time, related to China, as maybe demand for Japanese products is not so good, and China has a lot internal economic situations that need to be solved to get its economy back to some kind of normal or even a new normal.

Have a nice day and be safe!

Japan's Minimum Wage: Updated July 18, 2024.

 

Editorial: Japan's minimum wage must be increased as prices rise, livelihoods flounder

Article Source:  https://mainichi.jp/english/articles/20240716/p2a/00m/0op/016000c#cxrecs_s

Ideas:

The minimum wage situation has always been a difficult topic as companies don't want to pay and governments are trying to figure out what is the optimum wage for a worker, who might not have the best skills for an economy or society, but need to be able to live normal lives.

Maybe, just maybe many years ago, the minimum wage was enough to live on, barely, but now with cost of living consistently increasing it becomes impossible for someone to live a normal life on the current minimum wage levels.

As each prefecture might have different levels of economic activity, and different cost of living situations, what is good for Tokyo and Osaka might not be a good minimum wage for one of the rural prefectures.

Its unfortunate, but understandable that small and mid-size companies have to pay a minimum wage as maybe their profit margins are very thin, and part of the problem might be they are suppliers to larger companies that maybe force them to keep costs down that they charge the larger companies.

Of course non-regular employees might always be at the bottom of a company, with little or no benefits and then only minimum wages.

It seems full-time workers, who might look like regular employees don't have the same wage as other full-time workers, as maybe many service type companies employ women who might not have the best skills but they need to work for their families.

The minimum wage gap between different prefectures is only a small part as to why younger people might be leaving the rural areas to try and work in a large metropolitan area, as they are looking for better opportunities and not just wages.

The employment situation in Japan, like other economies is a very complicated situation, as maybe many small and midsize companies know what the situation is but their profit margins just can't handle any more wage increases.

At the same time, to get new and better talent to work for their company they know they need to increase wages, including the minimum wage.

Improved productivity, utilizing government subsidies, and other measures are good, but will they solve Japan's work place challenges.

Its a puzzle that is not easy to solve as there are many variables to consider to get the Japanese workplace up to international standards.

Passing on increased labor costs and or material cost increases to business partners is always a challenge as maybe large companies put a lot of pressure on small companies to keep costs lows which means maybe small companies can't increase wages and if they try to pass on their costs to large company partners they might be be told your contract with us as a supplier will not be renewed.

Yes, if possible, the Fair Trade Commission should do what it can to monitor price or contract negotiations, as unfortunately, there are some large companies will try to use their large company position or market power position to influence what smaller companies can do.

The minimum wage needs to increase in Japan, like regular wage increases need to increase as wages in Japan are far below international standards.

Again, its a very complicated puzzle that didn't happen just yesterday, as the situation has been developing for decades and Japan used to be higher in wage international standards but now its at the bottom related to OECD or advanced economies.

Have a nice day and be safe!