Japan Firms and Wage Hikes: Ideas Later.Updated March 27, 2026.

Japan firms mark 3rd straight year of over 5% wage hikes: survey

Article source: https://mainichi.jp/english/articles/20260323/p2g/00m/0bu/046000c

Ideas

It's good that Japanese companies are finally beginning to give their workers the wages they need to live in an inflation society like Japan these days.

Unfortunately, many Japanese have become too westernized and don't think about the long-term benefits of their employees but only about the quarter to quarter benefits of the stockholders.

At the same time, there is a supposed labor shortage in Japan which means if companies don't increase the wages of their employees some or many potentially could quit and move to another company that is paying higher wages. And now its not uncommon or not a bad thing to quit and change companies in Japan, as it was years ago.

The challenges is many or most of the small and mid-size companies just don't have the needed resources to match the pay of the large name-brand companies in Japan which means up to 70 percent of the Japanese workforce might not get a high enough wage increase that is larger than what is inflation in Japan, which then means consumer spending in Japan is not going to be where it should be to help the economy grow.

The Japanese economy is 90 percent plus small and mid-size companies and not the large name-brand companies that makes the news everyday, which means many or most of these small companies no one hears about but they basically keep the Japanese economy going forward despite, again, all the news the large companies get.

Yes, sustained wage increases will be a real challenge if inflation in Japan also stays above the BOJ 2 percent target level. A company can only give what it can give, meaning if its profit margin is limited, especially for small and mid-size companies they might not be able to do more than a 5 percent wage increase, if even that.

Of course companies in the services sector, with very thin profits margins might not able to give 5 percent as many service companies use just contract and part-time workers at their companies.

An increase of 14, 300 yen per month is something but it might not be enough needed for many workers in small and mid-size companies as maybe their disposable income has been shrinking every year almost since the end of the pandemic, which means their purchasing power in the Japanese economy is not enough to really help the economy grow if they spend or even spend at all.

You can't blame the companies, at least too much, as they too have budget constraints and have to work within their budgets to fit in the needed wage increases for their employees and maybe they would like to offer higher wage increases but they just can't do it without creating challenges for other parts of their company.

Ever since the 2008 financial crisis many companies have begun to use more non-regular and part-time employees as a way to cut costs. The challenge with that is the pay for these two groups is well below what is needed for a so-called living wage meaning they can work a non regular job and or a part-time job and be able to pay their month or weekly bills.

Not all non regular workers are students or those who just want to work part-time or a non regular job but real people with maybe children and maybe working women who need to make a good wage to help take care of their families.

Too many countries and companies treat non-regular workers as second class citizens and the same with part-time workers and some think they have limited skills and shouldn't be paid a real living wage.

A wage increase of 16, 356 yen per month is good and needed but can it be enough to overcome the constant inflation situation in Japan. Only time will tell if there is an increase in consumer spending in Japan, then maybe it is/was enough get the Japanese economy moving again.

If its not enough it will be seen soon enough as for example as the Golden Week holiday period will be approaching fast after the wage increases take affect in April and when May comes around with the Golden Week holiday period if there is an increase or a decrease in consumer spending it might be indicative of how much or even how little the wage increases have helped the economy.

And yes, unfortunately, as usual, small and mid-size companies are only going to get an increase of 12,361 yen per month and it might not be enough to get the 70 percent of workers at the small and mid-size companies to begin to spend as maybe still their disposable incomes are still going to be less than needed to help the Japanese economy grow again.

Have a nice day!