Japan Average Pay Up: Updated July 13, 2025

Japan's average pay ups over 5% for 2nd year in row amid price hikes

Article source:  https://mainichi.jp/english/articles/20250703/p2g/00m/0bu/065000c

Ideas

The article mentions or talks about Japanese companies, but wage growth for large companies might have been 5.25 on average but that doesn't mean small and mid-size companies got the same wage increases.

Up to 70 percent of the Japanese workforce works for small and mid-size companies which most likely didn't get 5.25 percent but probably much less.

With that 70 percent of the workforce has to continue to get less disposable income even more than the large companies employees.

Which again means less spending in the Japanese economy as the Japanese economy can't really grow if Japanese consumers don't feel good about their bonuses.

The per capita income of Japanese households is now one of the lowest among advanced economies when at one time was one of the highest.

An economy, as big as Japan's can't sustain itself with the levels of debt it has and the low leaves of spending due to a lack of needed wage increases.

Japan, if it isn't already, is about to become a country an economy of haves, the large companies, and the have-nots, the small and mid-size companies, with income inequality increasing every year.

Many small and mid-size companies just don't have the resources needed to give the same kind of wage increases as what large companies give.

If inflation being so rampant in Japan and hasn't lasted as long as it has maybe then the less than 5 percent wage increases that small and mid-size companies give might actually be enough to help 70 percent of the Japanese workforce and might actually begin to spend more in the Japanese economy.

As some articles have suggested not only are small and mid-size companies unable increase wages and they are unable to attract needed workers but some are beginning to file for bankruptcy as they can't find the workers they need to run their companies.

All economies need to see wage increases and it fuels consumer spending as consumers feel good about the extra income they get and then begin to spend more in an economy.

But the challenge is the Japanese economy has been down for so long it might take years for Japanese consumers to really feel good about their wage increase and finally begin to spend enough again to help the economy.

Again, just like large company workers, not all Japanese workers work for the unions in Japan and it might be about the same ratio of 30 percent, maybe less work for unions in Japan and up to 70 percent that don't work for unions in Japan which means again, small and mid-size company workers might have received much less in summer bonuses.

According to the latest estimate only about 16.5 percent of the Japanese workforce works for unions which means that up to 84 percent of the Japanese workforce might not have received a summer bonus the size that the union workers got.

So whatever the rest of the Japanese workforce got in summer bonuses, some Japanese consumers might save some if it, some might use it to pay bills, some might use it to go on summer trips and some spend some of it in the economy.

Finally the key is to get inflation to slow down or at trend downward so that Japanese consumers have more disposable income and to finally begin to feel good about how much they have left over and can begin to spend again to help the Japanese economy grow.

Japan can't completely rely on foreign tourism, which is at record levels to help the economy as it needs domestic consumers too to spend again to help grow the Japanese economy again.

Have a nice day!