Japan Minimum Wage increase: Update Sept. 11, 2025.

Japan's minimum hourly wage hits record 1,121 yen amid rising prices

Article source: https://mainichi.jp/english/articles/20250905/p2g/00m/0bu/055000c

Ideas

The increase in the minimum wage is both a positive and negative depending on which side of the coin you are on.

For many companies it's a negative as an increase in the minimum wage is an increased cost that many companies can't afford as it increases their profits margins and puts more pressure on companies.

For wage earners and especially part-time or even contract workers it's a needed wage increase as many of them rely on the minimum wage as their only source of income.

Some would say, and rightly so, the minimum wage should be a living wage meaning it should be high enough for workers to pay their bills, pay their rent, and other expenses in life.

Wage hikes are good and needed but again its depends on which side of the coin you are on, as wage hikes are a major cost for companies, and especially small and mid-size companies which some really can't afford as there profit margins are already stretched thin with increases in labor, raw materials, and energy costs.

Maybe the large companies can easily handle the wage increases but again its a major stress for many companies that can't afford them.

It must be remembered that up to 70 percent of workers in Japan don't work for the large name-brand companies but work for small and midsize companies which most likely can't match the wage increases of the large Japanese companies, which might mean if they do get an wage increase inflation might still be a major challenge for them.

South Korea back around 2015 or so tried to increase the minimum wage with mixed success and they provided subsidies for small companies that were having challenges with it. 

South Korea increased the wage a little over several years but many companies had to reduce the hours of some workers, reduce hiring, even laid of some workers and they claimed it was too much too soon for them.

South Korea has even started to experiment with many forms of automation as a way to reduce labor costs with robots at restaurants, self-check out convience stores, and self kiosks at fast food places.

The 7.3 percent increase might be too much for many companies as they are again struggling with raw material costs, increased labor costs, and high energy costs now. 

It's good that different prefectures were able to see difference in wage increases as the cost of living in Tokyo is much higher than the cost of living in some more rural prefecture, which are like states in the US.

But again, is a minimum wage of 1,226 enough for some to live on as maybe some workers who get the minimum wage might be single women with children, women how need to work part-time to help their families, and even university students who need to pay for their college expenses, and then there the fixed income group who need to continue to work and rely on the minimum wage to survive.

The major challenge or problem is not really with the minimum wage increase its the constant increase in raw materials and energy costs that just keep increasing each month in Japan which puts too much pressure on companies and then when there is minimum wage increase they have no room in their profit margin to to increase wages.

And then there is the possibility that some small companies are held hostage by the large name-brand companies as they don't want to accept the small companies strategies of pass-on their costs to the next in the supply chain which could be the large companies.

Many small companies in Japan are suppliers to the large companies as they make one or two products only for the large companies and some large companies refuse to accept the increase in prices that the small companies need to do to survive.

Unfortunately, it seems like each new Prime Minister makes the same pledge but nothing really gets done as the small Japanese companies are still struggling with high labor costs, high energy costs, and high raw material costs.

Again, in South Korea the government gave subsidies to help the small companies with the minimum wage increases but it didn't seem to really help much as they again had to lay off workers, reduce the hours of workers, and even stopped hiring new workers.

Again, its good that each prefecture can have a different wage as the standard of living in Tokyo is much different than the smaller rural prefectures in Japan, which of course many companies, if they had to use the same minimum wage as in Tokyo  might go out of business.

On the surface there appears to some real challenges for many small companies in Japan as they just don't have the same benefits as the large companies have. That might be just the nature of the market and large companies have more resources available while many small companies might just be living from month to month just trying to survive in Japan.

Small companies are the heart of any economy as there are more small companies than the so-called name brand companies which of course get all of the news and all the benefits while the small companies just get the scraps if any.

If Japan want to see its economy grow again, its needs to find a more balanced economy which not only favors the large companies but the small and mid-size companies too.

Germany has been able to find the right mix of small and mid-size companies and they all exist together as the large and the small are the in value. 

Japan needs to find that same mix values small companies just as much as large companies at this time is screwed toward the large companies only.

As a result, at this time, Japan has an economy of haves, the large name-brand companies and the have nots, the small and midi-size companies, which don't have the same resources as the large companies do.

Have a nice day!

Japan GDP Growth: Updated March 14, 2025.

Japan's Oct.-Dec. GDP growth revised down to annualized real 2.2%

Article Source: https://mainichi.jp/english/articles/20250311/p2g/00m/0bu/011000c

Ideas:

An annualized percent is what the final GDP growth would be if an economy grew the same in every quarter. But in reality an economy is like a living organism and can easily go up or  go down in the following quarters and is never a stagnant situation.

Consumer spending in Japan has always bee the weak link of Japan's GDP as consumers in Japan just don't spend like they do in the US. Japanese consumers, traditionally have been savers while US consumers traditionally have been spenders.

It is estimated that consumer spending in Japan is about 50 percent of Japan's GDP while in the US its more like 60 percent or more.

These days, or anytime in any decade maybe GDP growth is just not that important to the average person on the street, as they are just trying to live their lives and trying to survive. 

What does matter to average person, in most countries, is the cost of living and when they go to the supermarket and the food they need keeps going up then they get concerned with what is going on in the economy.

At the same time, maybe GDP growth, like the stock market growth, just doesn't reflect what is happening to the average Japanese household these days. Maybe GDP growth show some significant growth, but does the average Japanese household fee the growth, are the things they need to buy going up or down in price.

Private consumption or consumer spending has been decreasing since the pandemic and has not been able to gain any kind of traction to improve. Consumers in Japan, of course are cutting back on things they feel they don't need such as dining out and then services too.

Inventories are a trickly situation as sometimes it depends on demand and supply, such as if companies projected there is was going to be strong demand for their products, then they would produce more.

However if the demand projection was not correct a company could be sitting with a lot of inventory in their warehouses. The same is true if a company had the opposite demand projection and demand was much better than expected, the company warehouse inventories would be less and almost empty.

Japan has always been export oriented economy, as there just hasn't been the needed demand from the Japanese consumers to meet all of the demand needed for Japanese companies to grow, so they export a lot of products globally.

At the same time, global demand has not been what is should be so many Japanese companies are weary these days about their export products. For example demand in China just hasn't been the same since the pandemic an China seems to be going through a transition period with no real end to China's challenges at this time.

Capital investment is another situation that can be both up and down depending on the mood and sentiment of Japanese companies. If companies are feeling good about the Japanese economy and the global economy they might increase their investments, but if they less than happy with what they see in both they might wait and invest much or not at all.

With all due respect to those in this article, consumers can see and feel things are not so good in Japan and it doesn't take an economist to see that, as they are, yes, keeping their purse string tight and probably will continue to so for the time being.

As other articles have suggested prices keep going up and some articles have suggested many more companies are increasing the prices on their products.

In times past, many companies were reluctant to increase prices and or pass-on their raw material, energy, or labor costs the next in the supply chain, but it seems those days are long gone, as the profit margins of many companies have eroded significantly since the pandemic.

It seems the Bank of Japan is beginning to act like other central banks and beginning to take inflation more seriously, as before it seemed they just let inflation run its course hoping it would go down naturally and they wouldn't need to do much.

Many central banks use phrase "do no harm" which means don't do anything that might interrupt the flow of an economy, but sometimes central banks, like Bank of Japan, actually do need to step in and try to help the economy.

The Bank of Japan is hoping that many Japanese companies will increase wages do the level above what inflation is and again hoping they will be a motivator for Japanese consumers to start to spend in the economy again.

But its important to remember that up to 70 percent of Japanese workers don't work for the large name brand companies as most work for small and midsize companies in 2024 didn't come close to increasing wages at the same rate as large companies, which means up to 70 percent of the Japanese work force might not have gotten the needed wage increase that was above the current inflation level.

Not to get into anything political, but the situation in the US has affected stock markets in the US and globally, which could be a concern for the Bank of Japan as they might put-off any potential rate hikes until the summer.

Again, not get into anything political but the current situation, with a real potential trade war could be damaging to the global economy as there hasn't been this much concern since before or during the great depression of the late 1920's.

All thing being equal, if the Japanese economy can remain stable and not go into any major slump in the next few months the BOJ might just increase the rate to try and combat the inflation situation.

The Japanese economy might grow in the January-March period, as the Japanese economy is still stuck in a stagnant period or beginning to come out of it ever so slowly, which again, might be enough to sway the BOJ to increase it key rate.

And yes, its prudent to be cautious as the Japanese economy seems to always be up one quarter, down slightly in another quarter, and then up again, as its like a constant roller coaster and recently never seems to get any kind of upward momentum going. 

So the economy Japanese economy never really has a chance to gain any momentum which economies need to grow. Economies need momentum to grow, as maybe one sector begins to grow and then another and then another and then all cylinders are running and an economy now has enough energy to keep growing.

But for Japan, that never seem to happen or hasn't happened for a very long time.

Have a nice day!

Japan Food Prices: Updated March 12, 2025.

 

Prices of over 2,000 food, beverage items in Japan to be raised in March by 16% on average

Article Source: Article deleted by mistake

Ideas:

Food prices continue to increase in Japan as there seems to be no letup in the current inflation situation in Japan.

Some years ago many Japanese companies were reluctant to increase prices or pass-on there food production costs to the next in the supply chain including retail customers.

But these days, food and beverage company profits margins continue to decrease companies now have no choice but to pass-on their costs and again to the retail customer.

In years past, again, not all companies passed-on their costs to the next in the supply chain but like many things in an economy, it can build momentum, and when other companies begin to see or hear that other companies are passing-on their costs, others begin to do the same thing until almost all companies are doing the same thing.

Maybe in years past, and maybe even a few years ago, many companies were still reluctant to pass-on their costs, but as inflation as hit all things in Japan, it seems prices related to all or most things have increased.

What does do the average Japanese consumer or Japanese household these days. It seems they have no choice but to accept food price increases and or find replacements or substitutes for the things they want or need.

The weak Japanese yen has been a major problem for many companies that import raw materials for food production. Japan is a resource-poor country and has to import much of what is needs including maybe raw food materials needed to make processed food products.

It seems higher costs have hit many things related to food production and or anything needed to get the food to the Japanese consumer, including logistics, or supply chain costs, labor costs. 

Its been a major challenge ever since the pandemic as inflation has continued to increase in Japan, with no sign of letup.

The average Japanese household, at this time, might be feeling like there is no hope in inflation decreasing now or in the future.

Have a nice day!

Japan Core CPI: Updated Feb. 5, 2025.

Japan's core CPI up 3.0% in Dec. after end of gov't energy subsidies

Article Source: https://mainichi.jp/english/articles/20250124/p2g/00m/0bu/004000c

Ideas:

Japan has been experiencing increases in its core consumer prices since the pandemic period and it doesn't seem to be decreasing much yet.

The Bank of Japan is hoping inflation will be 2.0 percent or less and at the same time it hopes consumer demand and consumer spending will be the main reason for inflation an not companies passing-on their increased costs to the next in the supply chain.

Government subsidies to combat inflation is good and needed but the Japanese government can't do everything as its debt is among the highest among OECD countries.

Most advanced countries use interest rates as a way to control or limit inflation but the Bank of Japan has only recently started using the rate again, after many year of not increasing the rate.

While 2.4 percent might not be much but for some income groups it can be a lot and they begin to look for substitutes if at all possible.

An increase in the key rate increase to 0.5 percent doesn't seem like much but it might be enough to slow inflation as maybe some businesses or households will not go to the bank to get loans as the rate interest rate might discourage them.

The CPI increase was driven by cost-push factors which means companies were passing-on their increased costs to the next in the supply chain including the final retail consumer.

Currently it appears the trend is going to continue but by how much, as it could decrease or it could increase depending on the weak Japanese yen, which increases import prices in Japan.

The Bank of Japan is looking for Japanese companies to increase wages again this year and if the wage increases are to the liking of the Bank of Japan it will most likely increase the key rate again in the future.

The Japanese yen is weak because of the variance between the US key rate and the Japanese key rate and maybe the EU rate too. 

As the Bank of Japan begins to increase its key rate and the US begins to lower its key rate the rates of both countries begin to get closer together which can improve the weak Japan yen to become stronger.

Japan is resource-poor country which means it has to import much of what it needs including its energy needs, which can often fluctuate and Japan is mostly helpless to do anything about global energy prices.

There has been talk that Japan is considering going back to using nuclear energy, which is less expensive but some might say more dangerous especially since the 2011 earthquake and tsunami disaster which caused the shutdown of many reactors in Japan.

Again, as Japan is a resource-poor country which means it has to import much of what it needs including many food products or food supplies such as wheat.

The summer rice shortage is something of a mystery as some blame the poor growing season for the supply shortage and some blame other reasons such as the distribution system for increase in rice prices stating last summer.

Weather can always cause prices to go up or down depending on the situation of a good growing season or a not so good growing season and even global situations related to the weather can affect food price going to Japan.

Many years ago Japanese companies were reluctant to pass-on their increased costs to the next in the supply chain and especially the final retail customer as they were afraid of losing customers.

But times have changed as many companies profit margins are just out of control and inflation related to increased food material costs and energy costs have just become too much for many companies to handle so now they have no choice but to pass-on their increased material and energy costs to the next in the supply chain and yes including the final retail customer.

The increase of durable good might be something that could be related to an increase in the cost of manufacturing the good as again material and energy costs have increased the costs of everything in Japan and globally.

Usually the services sectors has the lowest wages as many services companies might only pay minimum wage or something like that. 

But as there is a labor shortage in Japan now many service companies now have to increase wages as a way to get the best talent possible even if the wages are not the best.

The Bank of Japan is looking very carefully about what Japanese companies are going to do with wage increases as the BOJ is hoping the increases will be enough to help the economy and consumers will begin to spend again to the point that the economy will grow again.

Have a nice day!