Japan's Real Wages: Updated August 7, 2025

Japan's real wages fall 1.3% in June despite summer bonuses

Article source:  https://mainichi.jp/english/articles/20250806/p2g/00m/0bu/012000c

Ideas

It should be remembered that 70 percent of the Japanese workforce are not working at large Japanese companies but rather small and mid-size companies that maybe don't have the resources to pay large summer bonuses.

What sometimes happens, in many economies is as inflation continues on wages too will begin to increase as money flows through the economy but Japan is in a completely different universe and normal economic idea are not working.

Inflation can be both positive and negative depending on other factors in the economy such as the movement of money and the interest rate at the time.

And again, as mentioned 70 percent of the Japanese economy is not large companies but small and mid-size companies that probably don't have the resources to pay the same wage increases as large companies or even the same bonuses as large companies, which means inflation for many in the Japanese economy could still be higher the the wage increases of some or many.

All of the data that is given in this article is good but a better question might be what was the average wage increase for small and mid-size companies and what kind of summer bonuses did small and mid-size companies get during the past year.

Everyone wants to talk about large Japanese companies like they are the back-bone of the Japanese which they aren't as small and mid-size economy actually drive the economy even more.

Wage increases of course are very important, for the Japanese economy, and for every economy but what needs to be included in article discussions is what is happening with the small and mid-size companies in Japan as it seems they are being left behind and not getting the wage increases needed to help Japanese families not to mention the need to grow the economy.

Nominal data is useless for the average Japanese household as it includes wages plus inflation which distorts the actual actual purchasing power of consumers in the Japanese economy. Nominal data is like a fantasy of what you might think is good but in reality is a distortion.

Every recent Prime Minister has said they are going to increase wages but the wage increases so far hasn't really been completely significant for the average Japanese household just yet.

The challenge is wages in Japan, in relation to other OECD economies has been decreasing for the past three decades and its just been the past two years that wage have finally began to increase enough to maybe just maybe Japanese workers can finally begin to see some daylight at the end of the long three decade tunnel.

Interest rate increases can be a positive and a negative factor in an economy such for the banking system they can be a positive but at the same time can be a negative.

For the average business they can a negative in that loans will now be more expensive and especially for small business who need loans to maybe get their inventory orders it can be a major negative for them.

For household their mortgage payments could increase along with interest rates on the use of credit cards too.

But at the same time increasing they key interest can be an incentive for an economy to slow down which in effect could potentially reduce inflation.  

But again the Japanese economy, for many reasons has been exactly operating on sound economic factors and a key rate increase by the Bank of Japan might not work and could be for of a negative than a positive. Only time will tell.

Have a nice day

Japan Real Wages: Updated June 7, 2025.

Japan's real wages in April fall 1.8%, down for 4th straight month

Article source:  https://mainichi.jp/english/articles/20250605/p2g/00m/0bu/016000c

Ideas

The Japanese economy and Japanese households are in a difficult situation as inflation continues on in Japan since the pandemic and wages while improving haven't been able to keep up with inflation.

The problem started many years ago when as its been suggested that Toyota back in the early  2000's decided not to give wage increases and then all other companies followed suit and then it almost became a yearly situation.

Maybe if wages had been paid yearly Japan might not be in this situation now. 

Nominal wages include inflation so it shows that inflation had increased by 2.3 percent for the 40th straight month, which is not good for Japanese households, low-income and fixed income groups in Japan.

Real wages the real purchasing power of Japanese households and not nominal wages as they only show the results of inflation in the economy.

The spring wage negotiations might have been good for some companies but all companies, such as small and mid-size companies probably didn't get the same wage increases as the large name-brand companies in Japan.

It must also be remembered that up to 70 percent of the Japanese work-force don't work for the large name-brand companies in Japan, but small and mid-size companies, which again, don't have the resources need to pay the same wages as the large companies.

Japan used to be a de-flation situation where prices were low and continued to be low as a result of low consumer spending in Japan and because of the continued lack of wage increases over many months and years in Japan.

Perhaps, as in any society, Japanese consumers go used to the low prices and now with 40 months of continue price increases, Japanese consumer are not spending in the economy as they normally would.

Workplaces of five more more employees would probably be considered a small company, and again small Japanese companies just don't have the resources needed to pay the same wages as the large Japanese companies do.

And then add in the price increases for the 42nd straight month and consumer purchasing power in Japan is even less than normal.

Yes, the wages increases might be reflected in the wages some, but they are still over-shadowed by the continued inflation in Japan that doesn't seem to be ending anytime soon.

The problem is Japan is a resource-poor country which means it has to import much of what is needs from energy to food and if global prices are higher than normal and if the Japanese yen is weak, that means prices in Japan are going to even higher than normal.

Consumer spending in Japan is around 50 percent of Japan's GDP, which is less than the 65 percent of GDP in the US. Which means maybe consumer spending in Japan is just not large enough to really drive economic growth.

If consumer spending in Japan were 50 percent or even 57.5 percent that might be enough to reach the economic growth needed in the Japanese economy.

But yes, without continued wage growth consumer spending in Japan is not going to improve enough as Japanese consumers are not going to spend if they don't have enough disposable income left after paying their monthly bills.

The Bank of Japan for many years, maybe since 2012, has been using a monetary policy of almost zero percent interest rates to improve the Japanese economy without much success. 

It was a good strategy but it just didn't work and the Japanese economy, at that time and now has been stagnant and hasn't really improved in its growth.

Moving to a normalization of monetary policy too might not work as the BOJ has increased the key rate twice over the past year and again without much real affect on the Japanese economy, as inflation has continued to increase yearly.

Increases in July, November, and December was good and needed but they didn't overcome the 26 month decline in real wages which is very important for Japanese consumer spending power in the Japanese economy.

If Japanese consumers don't have enough extra income or disposable income after paying their monthly bills they are not going to spend in the Japanese economy such as entertainment, eating out at restaurants, online shopping, and of course summer trips this summer during the Obon season.

Have a nice day!

Japan Real Wages: Updated July 9, 2024.

 

Japan real wages down 1.4% in May, 26th monthly fall despite hikes

Article Source:  https://mainichi.jp/english/articles/20240708/p2g/00m/0bu/014000c

Ideas:

Japan's real wages are just wages against inflation, which it looks like wages are decreasing since inflation causes less purchasing power related to any extra income Japanese households have.

While wage growth is good, the challenge is wage increases only happy in April, for the most part, while inflation could be every month, which makes the wage increase difficult to keep up with inflation.

It could easily be thought that some price increase are not relevant to me, as I don't buy any of the products that have increased, but in a large economy like Japan, there have been increases in many different products and prices increases eventually will begin to affect everyone.

The average wage increase might have been 5.1 percent, but it must be remembered that most likely that was large Japanese company wage increases and not small and midsize companies, which might have given much smaller wage increases.

For example maybe some 70 percent of Japanese wage earners don't work for large name brand Japanese companies, which means up to 70 percent of Japanese wage earners are still feeling inflation more than the large company workers.

But that might be what a market economy is all about, the large companies have more resources, and the small and midsize companies have to make do with what they have.

A ripple affect might have begun, but will it become a positive factor in all of the Japanese economy.

But again, as the wage increases were not the same for all Japanese companies will wage earners working for the small and midsize companies begin to spend like the wage earners in the large companies, or will the Japanese economy remain an economy of haves and have nots.

It might be too early to tell, as even the May to July period might not see a lot of spending as wage earners/Japanese households might be waiting to see if inflation is really going to decrease in the coming months.

Until there is significant decreases in inflation, consumer spending in the Japanese economy might not be that much at this time, even though there were some good wage increases.

High utility and food costs are costs that might cut into a Japanese households discretionary income and most likely households might not reduce or cut their utility usage, most likely they might cut back on the type of food they buy especially higher priced fruit and vegetables.

And now, as hot weather has again returned to Japan, most households are probably going to run their air-conditioners a lot, and or, as needed, go to any mall type places where they can spend the day, especially on the weekends.

Again, wage increases were good and needed, but it still might not be enough to get Japanese households spending in the Japanese economy, just yet.

The Bank of Japan can use all the slogans they want but the real variance is what do Japanese households or Japanese consumers feel with the wage increases. Are they enough to get them out spending again.

The Bank of Japan and the US Federal Reserve have used different strategies to reduce inflation and get their respective economies moving again.

The US strategy seemed to work, for the most part, while the Bank of Japan's strategy might have been to just let inflation run its course and not do anything that might cause any real side-affects to the Japanese economy, or something like, "do no harm" to the Japanese economy with our strategies.

As in any market economy, there is a big difference between full-time wage earners and part-time wage earners, but the difference might be too much in Japan, as there are a lot of part-time wage earners, maybe more than other advanced economies. 

Many or most of the part-time wage earners in Japan might be woman and or women with children, who might need to work part-time and still take care of their children,

The challenge or problem is maybe many of these women might want to work full-time jobs but the Japanese work environment might not be good for them as women with children and full-time career track jobs are not easy to find or companies willing to accommodate women with children.

It seems the trend, globally, is not a reduction of work hours, but work hours might be trending upward due to complexities in work and work stress in today's global work world.

The construction industry might have needed to increase wages due to the labor shortage and to get good reliable workers they need to pay good salaries, as maybe young Japanese workers don't want to work in the construction industry these days.

While compound services might be related to transformations related to work and demand for their services, and as such they might not need as many workers.

Have a nice day and be safe!

Japan And Real Wages: Updated May 11, 2023.

 

Japan's real wages fall in March for record 24th month

Article Source:  https://mainichi.jp/english/articles/20240509/p2g/00m/0bu/021000c

Ideas:

Most likely, what has happened in Japan, for the last few decades, is large Japanese companies, as especially those companies that are publicly traded, has shifted the emphasis from stakeholder emphasis to shareholder emphasis, and focusing on quarterly results, which means employees, were not given many wage increases as companies again, focused on shareholders and not employees.

So after decades of maybe not many wage increases the Japanese economy is stuck in stagnation, and even though wages were increased, in April of 2023, if wasn't near enough to get the Japanese economy out if its current stagnation phase, as wages are only once a year while inflation can be monthly,

There is as strong synergistic effect meaning, as household purchasing power continues to be eroded it can affect many different areas related to consumer spending in the Japanese economy.

Nominal wages are wages with inflation, and don't really tell the exact story. So though wages, including overtime, might seem good, what isn't explained is how much inflation takes away from the real wages over time.

Nominal wages might have increased by 0.6 percent but inflation might have increased by 3.5 percent, so there is a real difference between wages and inflation, which makes wages even less. which means less buying of many things in the Japanese economy. 

Most Japanese workers don't work for the large name-brand companies but small and midsize companies, which is similar to most economies in the world, as most workers, globally, don't work for the large name-brand companies.

The fact that only 20 percent of small and midsize companies were able or willing to increase wages by more than 5 percent, might be an indication they are still concerned with the future of the Japanese economy and or their bottom lines and profit margins just don't allow for much in terms of wage increases this year.

So what is going to happen to the 80 percent that didn't increase wages by 5 percent. Most likely, they might have hiring challenges related to new employees, as their wages might not be enough to satisfy an younger worker who is looking for a good competitive salary, and or a older worker, who still has many years left but is looking for something better.

Real wages is important compared to nominal wages. If real wage growth is more than inflation that means Japanese consumers, or those who got wage increases now have more purchasing power compared to inflation.

But, again, what about the 70's percent of the small and midsize companies that only saw 20 percent of them getting a wage increases of 5 percent or more. That means many small and midsize workers will be stuck, again, without the needed wage increases that is more than the inflation rate.

Which then means many Japanese households or Japanese consumers will not have the needed purchasing power to buy what they want or need, beyond their basic needs and or paying their monthly household bills.

By sector, the services sector was hit the hardest by the pandemic and had to layoff many of its workers and or reduce their hours during the pandemic. 

Now that the pandemic id finished, the services sector is trying to play catch-up with hiring and wages to remain competitive with other sectors.

At the same time, there is a so-called labor shortage in Japan and companies including those in the services sector, are trying to increase wages to get the best possible talent available, and that again, might mean better wages and better work/life experiences.

Each economy is different as its not good to compare one economy to another but wages in Japan compared, to other OECD countries, has decreased overtime, and, again, wage increases in the Japanese economy has not kept up with wages in the EU or the US.

One might say things might be cheaper in Japan compared to the US or the EU, and that is true for many things, but ask the average Japanese household and they might not agree.

The number of hours worked is decreasing each year, as the Japanese, for many, are not the workaholics that stereotypes as someone would describe the average Japanese worker.

That might have been the way it was in the 60's, 70's and 80s' etc. but in the 2000's and beyond the average Japanese workers wants to have their private lives and work lives separate from each other.

Have a nice day and be safe! 

Japan Real Wages: Updated April 11, 2024.

 

Japan real wages fall in February for 23rd month, down 1.3% on year

Article Source:  https://mainichi.jp/english/articles/20240408/p2g/00m/0bu/008000c

Ideas:

Real wages are wages without inflation, compared to nominal wages, which includes inflation, as Japanese companies have not been able or not willing to increase wages, inflation continues to be a more factor in the Japanese economy.

Only when companies are able to increase wages to the level that they are above the inflation level, households and workers will be stressed with inflation cutting into their extra income.

Perhaps, finally in April for 2024, companies can and will increases wages to the level that inflation is not so strong in the Japanese economy. But all companies, large and small need to increase wages for the full effects of wage increases for everyone in Japan.

Japanese business leaders may be willing to increase wages but they might not be able to do it depending on their profits margins and how much they can increase prices on their products to offset wage increases.

At the same time, maybe many small and midsize companies want to increase wages, but again, their profits margins are too compromised due to continual increases in raw materials and energy costs.

So Prime Minister Kishida can ask and plead all he wants but the final decision comes down to what companies can do in the final analysis.

Price increases might be decreasing but they are probably still too much for the normal family in Japan, and probably will remain too much unless a family gets a wage increase in the future.

All companies need to participate in the wage increases and if not Japan is going to have a two-tiered wage system of haves and have nots based  on large companies able to give wage increases and small and midsize companies unable to do so.

The result will be an unbalanced economy and an economy that operates below its potential in the near future.

But unfortunately, that is the makeup of a market economy, which has a lot of haves and have nots but the goal of any market economy is that all can achieve some kind of quality of life which includes a good salary.

What a company agrees to and what actually happens are too different situations as there might be "small script" or fine print writing related to wage increases and workers might not actually get  a 5.24 percent increase when all is said and done.

Even at 282,265 wages in Japan are much lower than many OECD countries as Japan has some of the lowest wages among advanced countries. It just shows how much Japan has changed since the 1980's or early 1990's when Japan was one of the richest OECD countries in the world.

Most likely, as some might say it, but maybe Japan grew too fast too soon after WW 2 and was only focused on economic growth or growth in foreign markets for their exports companies and didn't focus on the fundamentals needed for long-term financial or economic success.

Even at 360,00 yen that is not so much compared to other OECD countries. But at the same time, one positive related to Japan is that its executives and CEO's are not paid out of this world huge salaries that are seen in the US and Europe which is out of control for top executives. So in that sense, Japan is a more humane society that keeps its executives in line with normal salaries and not the "rock star" type salaries of the US.

What isn't mentioned is how many overtime hours do Japanese workers have to work and or are required to work, which usually is much more than in the US, and sometimes without compensation.

In Japan and elsewhere, most likely part-time workers makeup a significant percentage of workers in Japan now, including maybe contract workers or workers not on full-time full benefit contracts. This can have a huge affect on consumer spending and other economic activities in an economy overall.

The total working hours of 135.1 is not very clear as is that the total of both full-time and part-time together?

What Japan does, which maybe the US doesn't do is have bonuses twice a year which compensate workers, which makes up for the lower salaries in Japan compared to the US.

But overall, the Japanese wage system seems a more humane system compared to the US system, as there are few lay-offs or those fired in Japan compared to the US. Yes, the wages might be lower, but the employment system seems more humane compared to the hire and easily laid-off or fired system that exists in the US.

Have a nice day and be safe!