Japan Labor Union and Wage Expectations. Updated Oct. 26, 2025.

Japan's largest labor union to seek 5% or higher pay hike next spring

Article source: https://mainichi.jp/english/articles/20251024/p2g/00m/0bu/014000c

Ideas

Japanese labor unions and Japanese companies have a more cooperative relationship than the typical adversarial style of maybe South Korea or the US.

As a result Japanese unions can usually bargain in good faith without having to result in strikes with of course is very common in the US.

That doesn't mean Japanese labor unions get everything they want, which they don't, but it's a more cooperative atmosphere when negotiating.

Many times, labor unions always ask for more at the beginning of negotiations with the full knowledge they might not get it but then begin to negotiate in a more realistic tone. 

Real wages in Japan have fallen behind inflation which means consumer purchasing power of Japanese workers have been decreasing mostly since the pandemic when inflation became more significant.

As a result of less purchasing power of most Japanese workers they have less to spend in the Japanese economy and most likely of course have less disposable income to use on whatever they want.

A 5 percent increase or higher in wages, for large companies might be achievable but a increase of 6 percent for small and mid-size companies might not be realistic and most small and mid-size companies just don't have the resources needed to pay that much in wage increases.

Many if not all small and mid-size companies have very thin profits margins and they have very little room in even getting a small wage increase much less a 6+ percent wage increase.

Japanese companies, large, medium, and small are not very equal compared to Germany where the companies of all sizes are relatively equal.

In most cases or many cases in Japan the small and mid-size companies are suppliers to the large companies, which means the large companies dictate the price of supplies coming from the smaller companies, which means they usually don't get the price they want or need, which makes their profits margins very thin.

A hour wage increase of 1,300 might sound good or better than nothing, which it is, but tell that to a minimum wage worker who has to support a family or a single mother who has to support her child on just minimum wage.

But again, if there are small Japanese companies that rely on minimum wage labor, they might have no choice as they most likely can't afford to hire regular hourly wage workers for their companies.

The 5.25 percent increase in April of 2025 was good but most likely, again, that was mostly for large company workers as small and mid-size company workers might have received much less.

Finally there is a huge divide between what the name-brand large company workers get and what the small and mid-size workers get, which make up almost 70 percent of the Japanese work force. So because of the large different between the two groups, most likely consumer spending in the Japanese economy is not going to improve until the difference between the two groups is reduced significantly.

Have a nice day!