Japan Real Wages In July: Updated Sept. 28, 2025.

Japan's real wages in July revised down, fall for 7th straight month

Article source: https://mainichi.jp/english/articles/20250926/p2g/00m/0bu/049000c

Ideas:

Real wages are always affected by inflation and the Japanese economy ever since the pandemic has been constrained by consistent inflation, which of course lowers the purchasing power of Japanese consumers.

Wage growth has been a challenge for the Japanese economy as, for the most part, Japan's wages are much lower than other advanced economies and has again been constrained by consistent stagflation and near zero GDP growth for a very long time.

Japan, traditionally, gives two bonuses a year, which may or may not make-up for the lower wages in Japan. But as inflation has even hit companies in Japan summer bonuses sometimes are not what Japanese workers expect which of course means less spending in the Japanese economy.

There is the possibility, that when Japanese companies increased wages in April, which is the normal fiscal start of the new year in Japan, that companies might have depleted any extra funds needed for the traditional summer bonus.

And it must be remembered that up to 70 percent of Japanese workers don't work for the name-brand large Japanese companies but work for small and mid-size companies that don't have the needed resources to match what large Japanese companies give in wage increases, which again might mean less spending in the Japanese economy.

Nominal wages are really not important as they are not adjusted for inflation which means real wages are whats important for a consumer as real wages can determine what a workers purchasing power is or how much they can actually spend in an economy.

And to be sure, consumer spending in the Japanese economy has been constrained for a long time due to consistent inflation in Japan, and consumer spending makes up about 50 percent of Japan's GDP, which is probably not high enough to really improve economic growth.

Again the nominal increase wages just indicates how much inflation has increased in Japan which means that inflation has not decreased much and has put a constraint on much of the Japanese economy and especially again consumer spending in Japan.

The Japanese consumer price index has consistently, ever since the pandemic has been higher than normal or what's good for an economy and its consumers.

As was noted in previous articles even though there were gains in real wages but due to inflation being consistently higher than wage increases they were still not enough to overcome inflation in Japan. which again means consumers in Japan were less better off as wages haven't been able to help the average Japanese consumer with any extra disposable income needed to spend in the Japanese economy.

And again, it must be remembered that only about 30 percent of the Japanese work-force works for the large name-brand companies in Japan. The other 70 percent of the work-force work for small and mid-size companies which don't have the needed resources to pay the same wage increases which means that maybe 70 percent of the Japanese work-force might not have the needed disposable income to spend in the Japanese economy to help the economy grow.

Have a nice day!