Japan Real Wages: Updated July 9, 2024.

 

Japan real wages down 1.4% in May, 26th monthly fall despite hikes

Article Source:  https://mainichi.jp/english/articles/20240708/p2g/00m/0bu/014000c

Ideas:

Japan's real wages are just wages against inflation, which it looks like wages are decreasing since inflation causes less purchasing power related to any extra income Japanese households have.

While wage growth is good, the challenge is wage increases only happy in April, for the most part, while inflation could be every month, which makes the wage increase difficult to keep up with inflation.

It could easily be thought that some price increase are not relevant to me, as I don't buy any of the products that have increased, but in a large economy like Japan, there have been increases in many different products and prices increases eventually will begin to affect everyone.

The average wage increase might have been 5.1 percent, but it must be remembered that most likely that was large Japanese company wage increases and not small and midsize companies, which might have given much smaller wage increases.

For example maybe some 70 percent of Japanese wage earners don't work for large name brand Japanese companies, which means up to 70 percent of Japanese wage earners are still feeling inflation more than the large company workers.

But that might be what a market economy is all about, the large companies have more resources, and the small and midsize companies have to make do with what they have.

A ripple affect might have begun, but will it become a positive factor in all of the Japanese economy.

But again, as the wage increases were not the same for all Japanese companies will wage earners working for the small and midsize companies begin to spend like the wage earners in the large companies, or will the Japanese economy remain an economy of haves and have nots.

It might be too early to tell, as even the May to July period might not see a lot of spending as wage earners/Japanese households might be waiting to see if inflation is really going to decrease in the coming months.

Until there is significant decreases in inflation, consumer spending in the Japanese economy might not be that much at this time, even though there were some good wage increases.

High utility and food costs are costs that might cut into a Japanese households discretionary income and most likely households might not reduce or cut their utility usage, most likely they might cut back on the type of food they buy especially higher priced fruit and vegetables.

And now, as hot weather has again returned to Japan, most households are probably going to run their air-conditioners a lot, and or, as needed, go to any mall type places where they can spend the day, especially on the weekends.

Again, wage increases were good and needed, but it still might not be enough to get Japanese households spending in the Japanese economy, just yet.

The Bank of Japan can use all the slogans they want but the real variance is what do Japanese households or Japanese consumers feel with the wage increases. Are they enough to get them out spending again.

The Bank of Japan and the US Federal Reserve have used different strategies to reduce inflation and get their respective economies moving again.

The US strategy seemed to work, for the most part, while the Bank of Japan's strategy might have been to just let inflation run its course and not do anything that might cause any real side-affects to the Japanese economy, or something like, "do no harm" to the Japanese economy with our strategies.

As in any market economy, there is a big difference between full-time wage earners and part-time wage earners, but the difference might be too much in Japan, as there are a lot of part-time wage earners, maybe more than other advanced economies. 

Many or most of the part-time wage earners in Japan might be woman and or women with children, who might need to work part-time and still take care of their children,

The challenge or problem is maybe many of these women might want to work full-time jobs but the Japanese work environment might not be good for them as women with children and full-time career track jobs are not easy to find or companies willing to accommodate women with children.

It seems the trend, globally, is not a reduction of work hours, but work hours might be trending upward due to complexities in work and work stress in today's global work world.

The construction industry might have needed to increase wages due to the labor shortage and to get good reliable workers they need to pay good salaries, as maybe young Japanese workers don't want to work in the construction industry these days.

While compound services might be related to transformations related to work and demand for their services, and as such they might not need as many workers.

Have a nice day and be safe!