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!

BOJ and Rate Hike: Updated Dec. 8, 2024.

 

Dovish Bank of Japan official says not against rate hike, will study more data

Article Source:  https://mainichi.jp/english/articles/20241205/p2g/00m/0bu/019000c

Ideas:
The Bank of Japan usually moves very slow and the communication in this article doesn't negate that even though they always say they will look at the data and then decide.

It seems the Japanese economy has been in a recovery phase for a very long time, and for sure since the pandemic ended.

At one the Bank of Japan was communicating that the Japanese economy was too weak to increase the key rate, as the side affects were just be too much for the economy.

The Tankan business sentiment is an important metric as how the Japanese companies feel will go a long way in deciding what the BOJ is going to do. If the metric shows too much negativity, the BOJ might hold off on increasing the rate.

As far as wage data goes the BOJ has been hoping that wage increases will be more than what inflation is and if wage earners feel good enough about the wage increase to begin spending more.

But overall, don't expect much, as again, the BOJ is very cautious and doesn't make rash decisions, as they don't want to upset the financial markets.

BOJ governor could be communicating or giving a signal to the financial markets that a rate increase is coming, but the BOJ has said this before so we have to wait and see.

In the next two weeks if there is anything that is unusual in Japan or globally, the BOJ might not increase the key rate. For example if the US employment report is not good they might look at that as a negative for Japanese exports to the US.

If inflation is not where the BOJ want its to be that too might be enough to not increase the key rate. If any of the important economic data is not quite right, the BOJ might not increase the key rate.

While large companies, globally, get all the attention, the real economy, globally, is small and midsize companies, including Japan, where 70 percent of the Japanese workforce is working at small and midsize companies and not the large name brand companies.

If wages don't go up in the small and midsize companies in Japan, the Japanese economy is not going to see and increases in consumer spending as the average Japanese worker might still be holding back because their disposable income is too small to go out and spend.

And yes, the declining population is a major challenge for the Japanese economy along with the so-called labor shortage. 

Consumer spending as always been a major concern for the Japanese economy, and now add in inflation and consumers having less disposable income, the situation is not much better these say.

Structural reforms require money and some companies just don't want to spend the money to make the needed changes and some are just too old-fashioned and don't want to move into the 21st century in Japan.

With regard to China, China is going through its own period of structural reforms and they too will need some time to see them through.

Its been almost three or four years now since the pandemic hit and left so maybe Japan is taking longer than other countries to recover, and maybe before the pandemic the Japanese economy might have been in a not so good situation such as being stagnant and not growing much.

Its seems like, to be fair, that the BOJ keeps saying the same thing, and maybe for good reasons, as the Japanese economy has been stagnant for very long time, maybe almost three decades and hasn't really grown that much since the 1989 asset bubble crash in Tokyo.

However, the Japanese economy is a very stable economy even though it doesn't grow that much, so maybe its just a mature economy and will only see 1 percent or maybe 1.5 percent growth at the most from now on.

Have a nice day!