Japan Real Wages: Updated Feb. 11, 2025.

 

Japan real wages drop for 3rd straight yr in 2024 as inflation bites

Article source:  https://mainichi.jp/english/articles/20250205/p2g/00m/0bu/004000c

Ideas:
Japan wage hikes usually only happen once a year in April at the beginning of the new fiscal year. And of course inflation is year round so its not a surprise that wage increases were not enough to overcome increases in inflation.

Yes, wage increases were the highest in 33 years in Japan but problem as been wage increases have been very little or not at all the past 20 years in Japan.

Nominal wages don't tell the real story as they are wage and inflation combined so they don't show the real story about wages and inflation in Japan.

Consumer prices, again, are not once a year and can be every month while again, wage increases only happen in April the beginning of the new fiscal year in Japan.

Consumer prices might have decreased some but they are probably still high for some income groups in Japan.

Yes, bonuses for small Japanese companies might have helped as small Japanese companies and midsize companies don't have the ability to pay the wage increases as large Japanese companies. 

Wages in Japan compared to the other OECD countries are not as good as Japanese companies/society uses bonuses two times a year to make up for the low wages.

But even then, with the bonuses paid in December and May, they probably when added with the wages are still not good compared to wages in other OECD countries.

Japan has a long way to go to try and be competitive with wages in other OECD countries as its 2 decade freeze on wages has not been good for Japan and Japanese households.

Any increase in real wages is good and needed in Japan, but at the same time 0.6 percent from the year before is still not good for many Japanese households.

Again, nominal wages are not a true indicator for wages in Japan as they also include inflation added to wages.

Real wages are what is important as they indicate the purchasing power of Japanese households in Japan. 

Have a nice day!

Japan Real Wages: Updated Jan. 29, 2025.

Japan's real wages in Nov. revised up, log 1st rise in 4 months

  Article Source:  https://mainichi.jp/english/articles/20250124/p2g/00m/0bu/009000c 

Ideas:

A real wage increase has to do with a decrease in inflation meaning Japanese households had a slight increase in purchasing power.

At the same time, its quite possible the twice-yearly bonus in December might have helped more than a decrease in inflation.

Japanese companies might has had some good profits and or felt they needed to increase bonuses as a way to keep their current employees, and there is a labor shortage in Japan at the present time, which means companies are looking for workers and workers know they have more than one choice for a different job.

Again, as there is a labor shortage it's possible some companies might have given the winter bonus in November instead of December as a way to improve company/employee relations.

It might not have been a company-wide plan but it just happened that companies decided to give their winter bonuses in December instead of November.

As winter bonuses were larger than normal its possible some companies are worried that if they don't increase bonuses they might begin to lose employees to other companies, as employees have many choices if they want a different job.

Inflation has been consistent in Japan since the pandemic and real wages have not kept up with inflation meaning purchasing power of Japanese households have been less than normal since the pandemic.

As shown sometimes inflation does slow down to the point that real wages gain some momentum, but as seen its only had some momentum for two months out of 28 total months, which means the purchasing power of Japanese household has been less than needed.

Real wages are wages adjusted for inflation while nominal wages are wages that includes inflation with means they inflation inflates wages for Japanese households.

Again nominal wages are not what is important for consumers or households as they might mask the real effects of what is happening in an economy.

As seen nominal wages exceeded the consumer price index used to calculate wages, which again, means Japanese household purchasing power lost strength for the reporting month.

And it also means that Japanese consumers probably cut-back again on spending on things except what is needed but not much more.

While a 2.5 percent increase in base pay and wages was good, it really doesn't help Japanese households that much, as inflation easily reduces the purchasing power of increased wages.

And the same with a increase of 1.4 percent in overtime pay and nonscheduled wages, are not that much, and again, inflation can easily reduce any gains made.

Overall, wages and bonuses might be improving for Japanese households but the key is going to be what is inflation going to do and then there is the chance of wage increases in April as the Japanese government is hoping wage increases will be more than in April of 2024, which  was 5+ percent.

Have a nice day!

Japan's Real Wages: Updated Nov. 11, 2024.

Japan real wages in Sept. fall 0.1% on year, down 2nd month in row

Article Source: https://mainichi.jp/english/articles/20241107/p2g/00m/0bu/007000c

Ideas:

Wage increase in Japan usually only take place in April at the beginning of the new fiscal year, while inflation and prices increases happen anytime so no doubt real wages might have fallen behind prices in Japan.

Subsidies, are good and needed to help Japanese households, but they should only be temporary, at best in a market economy, but at the same time, inflation in Japan is not temporary and seems to be constant since the pandemic.

Wage increases should have been every year, and at a level that Japanese workers could feel good about the wage increases and then spent freely as needed.

Real Wages are what are important as real wages are wages without inflation and is what a consumer can use to buy things in the market place.

Again subsidies are good, but when they end Japanese consumers are back where they started as subsidies are only temporary and don't really solved the main problem of constant price increases.

The real challenge is the weak Japanese yen, which increases import prices in Japan, as Japan is a resource-poor country which put the Japanese domestic economy under a lot of stress.

But the real problem is the weak Japanese yen is good for Japanese foreign investments, Japanese exporters, and foreign tourists who go to Japan, as they have more purchasing power to buy things.

Average wages in Japan is for the average workers, most likely at a large company, while wages for 70 percent of the working population in Japan don't work for the large companies as they work for small and midsize companies who pay considerably less than the large Japanese companies.

And then there is the large group of contract workers in Japan along with the part-time workers who make even less and they are a large group of workers in Japan.

And at the same time many women, working women, especially working women with children might work for service type companies that have thin profit margins and make even less, which put as strain on Japanese families.

Prices increases of 2.9 percent don't seem like much, but you add that amount up each month it can be a large price increase for any Japanese household, especially the lower-income households in Japan.

This past summer, again was record temperatures in Japan, and of course Japanese households, especially in August during the month long holiday period people might have run their air conditioners a lot to escape the heat.

And or they might have tried to escape the heat and refrained from running their AC's too much and went the malls, if there were any, and stayed there during the day.

Most likely, Japanese companies might have used the summer bonuses on wage increases and companies just didn't have enough left to pay the usual summer bonuses.

In Japan, the salaries/wages are much lower than the US so companies makeup for it by giving workers two bonuses, one in the winter and one in the summer.

Real Wages are always adjusted for inflation and as inflation has been a constant in Japan since the pandemic real wages are been less for a very long time.

Have a nice day!

Japan Real Wage Increase: Updated August 9, 2024

 

Japan real wages log 1st rise in 27 months on higher summer bonus

Article Source:  https://mainichi.jp/english/articles/20240806/p2g/00m/0bu/017000c

Ideas:

Maybe, just maybe, its the beginning of the end, but a long end, to inflation in Japan and real wages finally outpacing inflation.

But its been many months of inflation more than than wage growth, its going to take time for Japanese households or families to feel the real affects of wage increases that outpace inflation.

However there might be some real hope as many have said the increase in wage affects wouldn't be seen until the summer period, which is now.

Actually wage declines started in the early 2000's with the Toyota Group refusing increase wages, and then all other big companies followed and its been very slow wage increases ever since that time.

Data watchers or trend followers, in the 21st century, can't rely on past dates for anything as companies makes moves and changes as they now see fit and of course everything revolves around the shareholder and not the company worker, like decades ago.

Some companies, maybe many companies, which are shareholder companies are very concerned about how much in bonuses they give to company workers and maybe some or many shareholders are always concerned about their shareholder earnings, and if companies give too much in bonuses it might affect the quarterly earnings.

The Bank of Japan is not going to rely only on the upbeat figures, as they are going to see if the Japanese economy has really grown, and if inflation is finally trending down.

While wage increases might be helping if the Japanese economy is still somewhat stagnant they might wait until the fall season to increase the key rate.

But yes, the weak Japanese yen is a major problem for some in the Japanese economy, and especially Japanese importers.

The real challenge or question is, if inflation is actually trending down and wages are trending up, what are Japanese consumers going to do, and consumer spending in the Japanese economy has been stagnant for a very long time.

While the current data seems to be positive, again, its not enough, as the real clue will be Japanese consumer spending in the economy or Japanese consumer sentiment, meaning, do Japanese consumers finally feel good enough to spend again in the Japanese economy,

Again, it might take until the fall to really see what Japanese consumer think and feel, but there is the summer heat wave in Japan which might deter Japanese consumers from going out and spending, but there is always online shopping which might increase during the summer months as more consumers will stay home and just shop online to maybe stay out of the heat, if they can afford to run their AC's.

But again, everything is up in the air, as again, the real test is consumer spending and wages increases as are they enough to help consumers get back to spending, or does their need to be one or two more wage increases for consumer to feel good and or inflation to really begin to trend down.

Its very good that companies finally gave wage increases, but its even better that finally part-time workers saw a significant wage increases. But lets be fair, part-time workers are always at the bottom of the worker ladder and they never get the best wages or benefits in the company ladder.

Many service companies and many small companies have very thin profit margins, which almost make it very hard for them to increase part-time wages as many service type companies rely on part-time workers only and they can't afford to have many full-time workers on their staff.

Its  quite possible, many Japanese households might be waiting for the Obon season to spend again, and they are just coming off the Golden Week period in early May, which usually is a big spending week in Japan.

There is also the possibility of consumer weariness in Japan as inflation and continued high prices as caused consumer sentiment, to weaken to the point of less and less Japanese consumers are spending now. 

And there is the continued summer heat as its been suggested that when the temperature in Japan gets above 35 C, Japanese consumers might actually spend less and not more, as summer spending is usually good, but not recently in Japan.

There is always going to be a lag in spending, as Japanese households maybe have to decide how much to save, how much to spend on their bills, and finally how much extra income do they have left to spend in the economy.

Japanese households, like everywhere, have limited budgets and they might decide to spend on this and not on this such as home expenses and or home repairs, as again, there is only so much income to go around.

Natural disasters, in Japan, is always a concern, as earthquakes and typhoons are a major challenge, always in Japan, like in 2019 when the Tokyo area was  hit with some major typhoons in a short period of time.

Japanese households, again like everywhere, will cut back when they can, and cutting back on utilities after the subsidies end is normal for consumers.

Durable goods, such as air conditioning units might be up in Japan, but the hot summer months are going to increase AC costs usage even higher and or some or many, if they can, are going to head to the underground train station malls and other places to reduce their AC usage this summer.

So there seems to be no end in sight, at least this summer as the hot summer months, which can easily be extended in September, and even October, as the heat just keeps on in Japan, and Japanese households have to figure out how to lower costs and at the same time stay cool in their homes.

Have a good day and be safe!

Japan's Real Wages: Updated June 13, 2024.

 

Japan's real wages fall for record 25th straight month in April

Article Source:  https://mainichi.jp/english/articles/20240605/p2g/00m/0bu/006000c

Ideas:

The cumulative effect of decreasing real wages, month after month, has got to be a major stress on many Japanese households.

Its been 25 months of declines, which means consumer spending or household spending in the Japanese economy is not going to improve much.

Companies might have increased wages, but inflation is still higher than what the wage were which again, means possibly not much spending in the Japanese economy.

Japanese households or Japanese consumers, eventually, if not already, are going to say enough is enough and begin to only buy the basics needed for their households.

Yes, the Bank of Japan could have should have increased the key rate a long time ago, but the BOJ kept saying there are just too many side affects to increasing the rate in Japan at this time. 

But, to be fair, what about the side affects for Japanese households and higher prices? Yes, if the key rate was increased many businesses might have had to pay higher business loan payments. 

And those already with existing loans would have had to pay even more interest, and there is the the possibility of housing payments and so on.

No one really pays attention to nominal wages as real wages are the key for Japanese households as nominal wages includes inflation and other factors.

So nominal wages increased for the 28th consecutive month, meaning inflation has increased for 28 months in Japan.

Not to keep talking about it, but this all started back in the early 2000's with the Toyota group deciding there would be no wage increases and then all other companies decide to do what the Toyota group did and ever since, then up to April of 2023, there were minimal wage increases in Japan.

Its understandable, back then as the Toyota group felt wages grown too much in Japan and many companies were worried about remaining competitive with Chinese companies which had lower wages.

But not the situation is much improved as wages in China have reached a level comparable to Japanese companies, or near comparable, but not completely.

It's understandable that large major Japanese companies can afford to pay higher wages, and its understandable that small and mid-size companies, just don't have the needed resources to pay the same wage increases as the large companies.

Because their is a labor shortage in Japan, at this time, many or some small Japanese companies might begin to lose employees to larger companies that pay higher wages, and if possible, it understandable for a Japanese household to want to move to a large company for better pay.

One of the challenges for small and mid-size companies is being able to pass-on their wage increases to the next in the supply chain, which might include large companies, but unfortunately, large companies might not like the idea that small companies are increasing their prices for wage increases.

For example large companies offered age increases of 5 percent or more and smaller companies could only offer wage increases of 3.62 percent. That doesn't sound like it that much of a difference, but over one year, with inflation it adds up overtime. 

The government subsidy program was a good idea, but the government can't do everything as even the government supposedly only has so much money in its budget.

Most likely inflation will remain high through the summer, and with the summer heat approaching energy and AC bills are going to be very high in Japan again this summer.

Probably mining and quarrying sectors are somewhat seasonal sectors and not operational every month of the year. As far as the construction sector goes, the companies in that sector maybe felt they had no choice but to increase wages, as if they didn't they might begin to either lose workers or not get new workers.

Even though wages might have increased, inflation most likely was much higher for many Japanese households even for those in the construction sector.

Just what is the percentage of full-time workers in Japan compared to part-time workers? Unfortunately, the number of part-time workers might have increased as many companies, not all but some, or many, are now mostly using par-time workers to reduce costs and improve the bottom line.

The service sector seems to be where many of the part-time workers are at, as many service type companies, to reduce costs, just use part-time workers these days. 

An economy can't exist only on part-time workers, but to be fair, maybe the companies feel they have no choice as they have to maintain their profits margins, and too many full-time workers would cut into their profit margins.

Service sector companies usually have very thin profit margins can't afford to hire too many full-time workers.

Have a nice day and be safe!