Japan Company Wage Increases: Updated July 6, 2024.

 

Japan's avg. pay hike tops 5% for 1st time in 33 yrs amid price rises

Article Source:  https://mainichi.jp/english/articles/20240704/p2g/00m/0bu/005000c

Ideas:

Wage increases are good and needed for Japanese workers in Japan, but because Japanese workers didn't get any real wage increases for maybe decades. The 5.1 percent increase is good but Japan still has a long way to go the help workers beat inflation.

Wage increases are good again, but they usually only come once a year, but inflation seems to come almost every month, at least the past few years, so again, Japan needs more wage increases and or the needed or expected bonuses for Japanese workers on a timely basis, which is usually twice a year.

Japanese workers most likely are not going to increase their spending in the Japanese economy until they can see and feel significant increases in wages, which should given them the extra income needed to be used in the economy.

Beating inflation with a increase of 5.1 percent is good, again, but the monthly amount going to actually be more than monthly inflation, which seems to increase every month.

For example, even if inflation only increases 3 percent each month that is every month compared to a one time wage increase.

Japanese households or Japanese consumers, might be reluctant to spend their wage increase as they might still be weary of constant inflation in the Japanese economy.

The problem is many small and midsize companies are unable to meet the same wage increases that the large Japanese companies offer, and as such maybe up to 70 percent of Japanese wage earners don't work for large Japanese companies.

Its understandable that Japanese companies, alone can't save the Japanese economy, and also not all Japanese companies have the needed resources to give wage increases more than 5 percent, but at the same time, no one really knows what reserves Japanese companies have after years of not giving needed wage increases.

The wage situation started back on the early 2000's when the Toyota group decided not to give wage increases, and of course then all Japanese companies did the same thing. 

The rational, at the time, for not giving wage increases was wages in Japan were too high compared to wages in China, because wages were much less in China, some in Japan thought companies would leave Japan and go to China.

Of course that scenario didn't happen exactly, but like most global companies they moved some of their manufacturing operations to China to get lower wages, at the time.

Its interesting that Toyota, all the way back in the early 2000's was the large company that spurred the idea of no wage increases, but this year they have fully met their unions' demands, which of course paves the way for most if not all large companies to do the same thing.

Even at 4.45 percent, at least small and mid-sized companies are going to get something, but will it be enough to beat inflation in Japan.

Small companies passing on their increased costs to the large firms, is always a tricky situation, as sometimes, smaller firms which are suppliers to the large firms, are told in many different ways not to increase costs, and or we will not renew your supply contract for the next year, so many small companies, sometimes, are reluctant to pass-on their costs to the large firm that they supply.

Have a nice day and be safe!