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!

Japan Firm Wage Increases: Updated March 15, 2025

Japan firms offer over 5% wage hike for 2nd straight year: survey

Article source: https://mainichi.jp/english/articles/20250315/p2g/00m/0na/020000c

Ideas:
Its good that Japanese companies are finally increasing wages as the previous decade they didn't increase wages and or the wage increases were minimal.

But it must be remembered that the wage increases might be for the large Japanese companies and most Japanese workers don't work for large companies but small and mid-size companies which don't have the resources to match the large companies.

Yes a 17,828 yen increase is very good or $120 dollars per month but as inflation continues to increase in Japan, will the wage increase be enough for Japanese consumers to begin to spend again.

And its very good that small and midsize firms were increasing wages too, and a 5.09 percent increase is a good start, but again will it be enough to overcome the consistent inflation challenge in Japan.

Will Japanese workers just save the wage increases, will they use it to pay the normal expenses, of will they be able to finally begin to spend in the Japanese economy to get the economy moving again.

Yes, a 6 percent increase will be good, but it is highly unlikely that Japanese small and midsize firms have the resources needed or the room in their profit margins to get to 6 percent in a wage increase.

But again, at 5,09 percent that is a good start for small and mid-size firms that usually don't get anything near what the big firms get.

For the most part, there is two-tiered system in Japan of large name brand companies and then all of the small and midsize companies in the other tier, with the large companies have the best salaries, best benefits, and maybe best working conditions.

A wage increase of 14,320 yen is again a good start but will it be enough to get small and midsize Japanese consumers to begin to spend again to grow the Japanese economy, as they make up 70 percent of the workforce in Japan.

Its good that 351 companies are able to give increased wage increases, but that means over 400 small and mid-size companies might not have the resources needed to increase wages.

Japan is in the middle of a so-called labor shortage and its quite possible the companies that increased wages as thought about that they needed to increase wages to keep our current employees and or attract other employees.

At the same time, most likely those companies that didn't increase wages are concerned that might not attract new needed workers and or worried of those they have now are going to change to a new company with higher wages.

Non-regular workers in Japan and globally are always the lowest in companies and of course they always get the lowest wages or even wage increase.

But it seems maybe all things in Japan are finally going to get out of the stagnant situation Japan has been in for a very long time.

Stagnation is not just a economic situation but also a mindset as households can get into a stagnant mindset and just try to survive from day to day.

Its also the same with companies as the stagnant economy can affect how companies handle the day to day or quarter to quarter or even the year to year environment.

Maybe, for example, as wage earners in Japanese companies begin to have a different mindset and begin spend again, it might be the start a new paradigm in Japan and as one sector begins to change then other sectors begin to change and so-on then all of a sudden the Japanese economy is back to running on all cylinders instead of a half limited engine.

The Japanese economy has been running on a half-cylinder engine for decades and its time for the Japanese economy get back to running on all cylinders.

Have a nice day! 

Japan Labor Shortage: Updated March 17, 2025.

Japan's shortage of full-time workers at worst level since COVID

Article Source: https://mainichi.jp/english/articles/20250309/p2g/00m/0bu/016000c

Ideas:

The labor shortage in Japan has been a long time coming as there are many reasons for the labor shortage.

One reason for the labor shortage might be government policies or many company policies that force Japanese workers to retire at at 60 or 65, while many might want to keep working because of financial situations or they want to keep active.

Another reason might the long-time challenge of Japan's low birth rate, due to maybe not so good treatment of women in the workforce with forces or expects women to leave a company once they get married. Of course Japanese women, in many cases don't have high level management positions in Japan.

Another reason might be Japan's immigration policies which, for the most part, doesn't help with Japanese companies who want to hire foreign talent but the immigration process is not kind to them.

The add in the normal global situation where births are down in most advanced countries and Japan is no exception as it has one of the lowest birth rates among advanced countries.

Japan can reduce it labor shortage if if does on of three things. The first is to get rid of the forced retirement age of 60 or 65 and let those who are able and willing to work continue to work like in the US.

The second is to give Japanese women better jobs in companies and then they would be more willing to continue to work and not quit after they get married. Many Japanese women are tired of just low-level menial jobs and want more and better jobs in Japan. 

Another is to improve the Japanese immigration system that promotes the best talent globally and help them find jobs in Japan as that would go a long way to helping reduce the Japanese company labor shortage.

Unfortunately Japan has a rigid hiring system that doesn't promote change and is not flexible and unable to change with the times.

If Japan re-tooled its immigration system that allowed more foreign workers, there would be less shortages in Japan, but the immigration system is very rigid and very inflexible.

Part of the problem is the Japanese work culture with long hours and rigidity that might be a big reason for many leaving a company when they have to instead of a more flexible work culture and a better work-life balance, older holders might be inclined to keep working for a company instead of counting the days down just to get out of there.

Increasing wages is very good idea as yes, it will help retain existing workers and help attract new workers to the company. 

But again, if workers could stay past age 60 or 65 with a wage increase you would probably see many wanting to stay which can significantly reduce a company's labor shortage.

Wage increases are good but Japanese companies need to improve their work-life culture and not have workers working long hours and or on weekends and that, these days, turns off young workers and even older workers too.

The Japanese government needs to step in and help some or many small and midsize companies and not just let the market decide who will survive and who will not.

Not all companies have the resources needed for wage increases and if they can't they might not be able to hire any new workers and the workers they have are going to leave and go to companies that are offering higher wage increases.

This might be considered a form of market failure or even a form of market power where some companies know if they increase wages they can raid another company and get that company's workers as the other company just doesn't have the resources to match what the other company is able to do.

Have a nice day!

Bank of Japan And Wage Growth: Updated March 9, 2024.

 

Prospect of wage growth still challenging for households, BOJ

Article Source:  https://mainichi.jp/english/articles/20231229/p2g/00m/0bu/020000c

Ideas:

Companies wages need to increase to the point where ordinary citizens can feel the effects in their disposable income.

There might be a lag effect, meaning, it might take time for Japanese consumers feel good about their increased wages.

That's not the Prime Ministers fault, as in all economies, when wages increase it might take several months for longer to see the full effects to the wage increases.

The Bank of Japan will have to make a decision, if and when they increase interest rates. as the Japanese economy, for a very long time has lived on borrowing costs as rock-bottom levels.

And then there is the idea of Japanese export companies who are benefitting from the weak yen, due to the zero interest rate. And don't forget international tourists who travel to Japan, maybe due to the weak yen and improved purchasing power.

There are always positives and negatives in an economy. Such as a significant labor shortage in Japan, at the moment would be definite negative, but increasing wages as a way to get more or better workers is a positive.

Perhaps, over the years many Japanese companies might have thought about increasing wages, but as Japan is a group society, maybe many companies didn't do it, as other companies were not doing it.

Its been known for many years too. that Japanese companies were sitting on huge profits, and one of the ideas for the zero interest rate situation, was/is if companies didn't use their huge profits then then they over the long term, would lose them because of zero or negatives rates in their company banks.

But as companies increase wages, their profit margins might shrink, so of course, they are gong to pass-on their increased wages increases to the next in the supply chain, including maybe the final customer.

Its going to take a lot for the Bank of Japan to be in sync with the US Federal Reserve and there is, at this moment, a significant different between Japanese interest rates and the US rate.

But, as always, the Japanese economy is not cooperating, as it seems to have entered another recession, after two consecutive quarters for negative economic growth, which doesn't fit with the Bank of Japan's plan to change it current policy.

Weak demand, weak consumer spending, has been a challenge for the Japanese economy for a very long time, and it might not change anytime soon, as there are some structural challenges within the Japanese economy, such as an aged society, which spends less than normal.

And then there is the idea that 70 percent of the Japanese workforce don't work for large Japanese companies, and in April of 2023, only large companies workers got wages increases and maybe some small companies gave wage increases, but not as much as the large companies.

Wage increases in April of 2023 averages around 3.6 percent but inflation, for most Japanese workers was much higher than that, and again, many Japanese workers didn't get a wage increase, or if they didn't it wasn't 3.6 percent.

To see or feel the full effects related to the wage increases they need to be more than what is the current inflation rate. If not, than Japan will continue to be stuck with less consumer demand and less consumer spending to grow the Japanese economy.

Whether its 3.8, 3.7, or 4.1, the wages increases need to be even more than that for consumers/workers to feel good about their wage increases before they begin to spend again in the Japanese economy.

And then there is the ideas of large companies maybe giving higher wages increases than small and midsize companies which is setting up, if not already, two-tiered economy of haves and have not, as the Japanese economy is made of large companies wages increases and small company wage increases, who are being left behind.

And yes, not all companies can keep up with the biggest increases of some Japanese companies, but good or bad, that is part or a market economy, as not all companies grow at the same rate, or have profits at the same rate, and as such they all can't spend the same.

The Japanese economy has a long way to go before it breaks with deflation, as deflation is/can become a mindset in a society and economy, as consumers/households get used to lower prices and lowered expectations.

And yes, too, wage increases might only have a limited impact on consumer spending, as most likely its going to take a while before consumers actually feel good about their wage increases and they might even save some or all of it before they begin to spend again, freely in the Japanese economy.

Yes, it might take until the summer for wage increases begin to affect the Japanese economy, and maybe by Golden Week in May, there will be some significant consumer spending in the Japanese economy.

But then again, Japanese consumers might not want to spend just yet in May and Golden Week and they are still not seeing the full effects of the wages at that time.

And yes too, the Bank of Japan is not going to do anything too fast or too radical, as they don't want to upset the financial markets with any moves that are not needed or expected.

The effects of the weak yen, and its variance with the US rate, and US dollar, might not change much until 2025 and definitely not in 2024.

Inflation might be decreasing but is it decreasing enough for the benefit of Japanese households or Japanese consumers.

The growth rate of the Japanese economy has always been a challenge and it rarely grows more than 2 percent, if even that.

But at the same time, the Japanese economy, and society, is a very stable economy, and despite all of its challenges, is still a strong economy and society.

One of the benefits of increased interest rates, is higher savings rates for Japanese consumers/households, which in the past, were some of the highest savers in the world.

But the challenge is a mix of balanced economy, some savings and some spending in the economy, as consumers maybe begin to feel good about the increase in wages.

Most central banks prefer to see inflation between 2 and 4 percent, but maybe the Bank of Japan feels 3 or 4 percent is too much for the Japanese economy and Japanese society. 

The Bank of Japan is looking for 2 percent inflation related to increased consumer demand and or consumer spending, and maybe even companies who pass-on their wage increases to the next in the supply chain.

Changing from unusual to a normal one, in terms of policy requires not only companies being ready and prepared for the policy changes but for the Japanese society too.

If the Japanese society is not ready for the changes it could have negative effects such as less consumer spending, less consumer demand and so on.

For companies there might be less capital spending and maybe even less wage increases in the future.

Have a nice day and be safe!

Japan Company Wage Increases: Updated Feb. 3, 2024.

 

Japanese firms giving record pay raises this year, poll shows

Article Source: https://www.japantimes.co.jp/business/2023/11/28/companies/japan-regular-pay-raise/

Article:

Japanese firms have raised or will raise monthly average regular wages by a record amount this year, an annual government survey showed on Tuesday.

Policymakers have said hiking wages is essential to ending deflation and to achieving and sustaining an inflation rate of 2% in a stable manner.

Monthly regular pay rose 3.2%, or ¥9,437 ($63.59), on average this year — both record highs since comparative figures began in 1999 — according to a Ministry of Health, Labour and Welfare poll conducted July 20 through Aug. 10 with 1,901 respondents.

Last year, regular pay, which includes allowances but excludes overtime, holiday and special payments, rose 1.9%, or ¥5,534.

Ideas:

For many years, Japanese companies considered employees as stakeholders meaning they valued them as being significant parts of the company.

But maybe around 2008 or even earlier, stockholders became the most significant stakeholder in the company. At the same time, maybe because of the global financial crisis, Japanese companies started hording or holding onto cash reserves, and were not giving wage hikes to their employees.

Also, it should be noted, that maybe most of the wage increases. last year, were by large Japanese companies and small and midsize companies either couldn't afford wage increases and or just decided, at that time not give give wage increases.

Over 70 percent of Japanese wage earners don't work for large Japanese companies, so maybe last year many wage earners didn't get a wage increase.

Article:

The percentage of firms that raised or will raise average regular wages this year reached 89.1% versus 85.7% in last year's poll, the highest since 2019.

The impact of that percentage increase was reflected in the survey's record results, a ministry official said.

Wages had been stagnant for decades until last year, when rapidly rising raw material costs propelled inflation and added pressure on firms to compensate employees accordingly.

Ideas:

In the survey mentions 89.1% will give wage increases but are these just large companies or are they also small and midsize companies too.

An economy doesn't run on large companies only, even though they get most of the news about the economy, as most economies, globally, are run on small and midsize companies. 

Unfortunately, it seems the Bank of Japan is relying on large companies to pull Japan's economy out of its stagnation and deflation mindset. And if large companies don't give the needed wage increases that the BOJ wants Japan will continue to suffer with continued inflation.

But small and midsize companies too, need to find a way to increase wages, even to the point of increasing prices on their products as a way to pay for the wage increases.

Article:

Major companies agreed to average pay hikes of 3.58% earlier this year, the highest increase in three decades, trade union group Rengo has said.

Early indications from businesses, unions and economists are that the labor and cost pressures. (Typo here)

Ideas:

If small and midsize companies don't increase wages, the Japanese economy might be headed to a haves and haves not situation, with income inequality becoming a major challenge for the Japanese economy.

The 70 percent or so who work for small and midsize companies will be left behind as incomes increase for large companies, while those not working for large companies will be severely constrained in what they can do in the society.

Many think Japan is this rich country. It might have been in the 1980's but since the asset bubble crash of 1989, Japan has steadily lost ground among the richest advanced countries in the world.

Yes, the Japanese stock market might be at record levels, but a stock market doesn't represent most of society.

Have a nice day and be safe!