Japan Companies and Wage Increases: Updated Aug. 21, 2025.

Major Japanese firms' monthly wage hike tops 5% for 2nd straight year.

Article source:  https://mainichi.jp/english/articles/20250806/p2g/00m/0bu/041000c

Ideas:

While its good that large company employees got a wage increase of more than 5 percent, it should be remembered that up to 70 percent of Japanese workers don't work for large Japanese companies but rather small and midsize companies, which usually don't have the resources needed to pay the same wage increase as large companies.

What this means is small and midsize workers in Japan might not have the same amount of disposable income to spend in the Japanese economy which of course might mean less economic growth.

Many companies are increasing wages as a way to keep needed workers and to lure needed workers to work for them. But the problem is, again, many small even mid-size companies just don't have the resources needed to attract workers as, yes, there is a definite labor shortage in Japan that is going to maybe cause some small Japanese companies to close.

Unfortunately, now with the US tariff situation Japanese export companies could be significantly affected which means as profits decrease and profit margins decrease small and mid-size Japanese exports companies are going to be the effects of the tariffs the most. Large Japanese companies that export might be able to absorb some or most of the tariffs.

It could be suspected or maybe even assumed that large Japanese companies, as reported in some articles years earlier, that large companies were hording cash and for a long time didn't give significant wage increases to their workers.

But many Japanese companies, especially publicly traded companies, are not obligated to take care of their shareholders first and not so much about companies workers who now might just be considered commodities to be easily laid-off when needed.

Non-manufacturing companies, which many are service-type companies, usually don't have large profit margins and can't afford to pay the same wage increases that manufacturing companies can pay.

While its good to focus on what large companies did with wage increases, but again, it must be remembered that 70 percent of Japanese workers don't work for large companies but small and mid-size companies.

Large companies, globally, in every country usually get all the news but most economies are made up of small and mid-size companies that employee more workers than large companies.

Large companies might drive some of an economy but they don't drive the majority of an economy which small and mid-size companies do when everything is added up.

And the spending in an economy by small and mid-size workers might be significantly more than what the 30 percent of large companies employees spend in an economy.

So its a mistake to ignore the small and midsize companies or their workers in an economy as not being very significant when if fact they might out-spend large company workers by 3 times.

Have a nice day!