BOJ Keeps Rate The Same: Updated Dec. 25, 2024.

 

Bank of Japan keeps rates on hold amid caution over wages, Trump policies

Article Source:  https://mainichi.jp/english/articles/20241219/p2g/00m/0bu/017000c

Ideas:

The Bank of Japan always moves very slowly and if they don't see enough clarity they are not going to change the rate.

The Japanese wage situation is still not clear and maybe the reason for that is up to 70 percent of Japanese wage earners don't work for the large name-brand Japanese companies but instead work for small and midsize companies that didn't give the same wage increase that large companies did.

So maybe the 70 percent who didn't get the 5+ percent wage increase that large company workers got, their disposable income is still not enough to start to spend freely in the Japanese economy.

Sustained wage growth is not going to be that strong unless small and midsize companies can get some support from the Japanese government so that they can increase wages like what large companies are able to do.

Most likely many small Japanese companies are suppliers to large Japanese companies, and large Japanese companies might not agree to the idea of small supplier companies passing-on their increased material costs to the larger companies.

The Bank of Japan needs so specify just what is a positive cycle of wages and prices as is it related to as wages increase then demand for products will increase which means companies will increase the prices.

The Bank of Japan is correct in examining the potential affects of the next administration in the US not only on the affect in the US but also how its going to affect markets and economies globally too.

Everything right now is up in there air as no one knows what is really going to happen, and maybe many Japanese export companies are worried about the possibility of their products becoming more expensive in the US due to supposed tariff situation.

While the weak Japanese yen increases the price of Japanese products in Japan, it might not be that much, but the tariff situation might be enough for US consumers to think twice about buying some Japanese products.

The Bank of Japan might be thinking that the 2014 and 2019 Japanese sales tax increases had a lot of negative side affects that cause consumer spending to decrease over several months. 

So the BOJ might be thinking a possible rate increase might have the same affect with consumers decreasing their spending and companies not going to the banks to take out loans as the rate increase will increase the loan rates in Japan.

Real wages, maybe for large company workers are good, but for all the other workers, which makes up maybe 70 percent of workers just not strong enough to overcome the continued inflation in Japan and doesn't give them enough disposable income.

Most likely, like many countries, most citizens have no idea about the interest rate hike until they have to go to the bank for a loan or they see inflation has continued on in Japan that affects their disposable income too much.

Increasing the key interest rate can some side-affects which might or might not affect all citizens in a country. In that case its unclear if the Japanese people will accept the rate increase, as again, they have no idea what it is or what it does.

It seems the Bank of Japan has not clearly explained what are the expectations for the economy and prices. Does it mean inflation should be at or below the 2 percent target and does it mean prices should be based on consumer demand and consumers spending and not based on companies passing-on their increased costs to the next in the supply chain including the final retail customer.

It years past, the Bank of Japan has often stated the Japanese economy has been too weak for a rate increase so is there GDP growth rate that the BOJ might need to see before it considers a rate increase.

Or is the Bank of Japan just kicking the can down the road until the next meeting in January and then again, they might say we need to continue to see more data.

It seems the US Fed. might be thinking as the as the new administration comes in the Fed will take a wait and see as to what is going to happen to the US economy in 2025.

Inflation in the US might be increasing again, but will it be at the same level as during the pandemic or right after the pandemic.

The Japanese yen as been weak and most likely if will continue to remain weak in the future.

No doubt the Bank of Japan has no real intention, at this time, to increase the key rate, as it hasn't done much the past 15 years to increase the rate.

The Japanese yen has remained weak and maybe the BOJ wants the rate to remain weak to help Japanese exporters, Japanese investors in foreign countries, and the record number of foreign tourists who go to Japan and spend a lot of money.

Then of course there is the domestic economy and Japanese importers who see their import prices increase because of the weak yen, and then pass-on their costs to the next in the supply chain and maybe even the final retail customer.

The BOJ's ultraloose policy was probably a good idea the time in increasing the money supply in Japan so that more consumers and businesses had access to more money which was intended to increase spending in the Japanese economy.

But as stated the results were not there or not as much as expected as the Japanese economy was stagnant and never really improved that much.

And yes, the idea or theory of pumping more money into economy is strategy that can work and has been used in many different countries to stimulate economic growth.

And yes, maybe it was time to change strategies and begin to increase the key rate, but in July the markets were caught off-guard and reacted negatively toward the rate increase.

If the Bank of Japan does actually increase the rate in January the BOJ needs to communicate clearly to the financial markets what they intend to do and not be unclear or say we are still looking at the data. 

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 Labor Union Seeks Pay Hike: Updated October 30, 2024

Japan's largest labor union to seek pay hike of at least 5% next year

Article Source: https://mainichi.jp/english/articles/20241018/p2g/00m/0bu/053000c

Ideas:

Its good that the biggest trade union want higher wages to help their workers but also to help small and mid-sized companies too get higher wages, as they are often overlooked compared to large companies.

The challenge might be that small and mid-size companies can't afford the higher wage increase as they are probably already challenged by increased labor costs and increased material costs, not to mention increased energy costs.

Small and mid-size companies might want to pay their workers more but their profit margins are just too thin to do it.

Rengo might have good intentions but they don't see or speak exactly for each small company as each small company, while wanting higher wage increases to get more talent working for them, but maybe they are unable to pass-on their costs to the next in the supply chain, as customers and other companies might not like it that much.

The problem also might be some or many of these small companies are suppliers to larger companies which have more market power and can easily or not easily due to contracts, tell a small company we don't want to pay for the increase cost you are passing on to us.

Rengo may or may not have the market power to get large companies to agree to the passing-on of the costs of smaller companies, but they should try to make sure it can be done.

For many years, many Japanese companies either gave minimal wage increases or no wage increases at all, as that was the norm in much of Japan since 2000.

The small firm increase of 4.45 percent was not bad but it wasn't good too, as inflation added up each month, probably was more than that.

Large companies of course in most sectors are the market leaders and what happens in negotiations with large companies trickles down to the mid-size and small companies and they usually get wage increases a little less than what large company workers get.

Have a nice day!

Workers and Wage increases; Update July 20, 2024.

 

Only 6% of workers in Japan say wage hike rates larger than price increases: poll

Article Source:  https://mainichi.jp/english/articles/20240717/p2a/00m/0bu/013000c

Ideas:

The problem is, wage increases are only a one time increase, usually in April, but inflation seems to increase monthly. So even if wage earners might have got a 5% wage increase inflation might have increased monthly, which means inflation most likely, in summary, was more than the 5% percent wage increase.

Part of the problem might go back to the beginning of the 2000's as many companies, back then, didn't give pay increases until maybe 2023.

It must also be remembered, that maybe 70 percent of wage earners in Japan don't work for large name brand companies and work for small and midsize companies, which might not have had a 5% percent increase, but much lower, if any at all.

The respondents in the survey might come from large array of workers in different size companies, and again, small and midsize company workers might not have gotten the same wage increase as large company workers.

Every worker or Japanese household is different and they see pay increases differently according their needs and wants. Some might see the 5% percent, if they got that, as good, while some might see it as not enough that barely covers their monthly expenses, or gives them little or no extra income.

It must be remembered, again, that between April of 2023 and April of 2024, inflation in Japan increased a lot. Even if inflation each month was not that much, if you add up each month, most likely it was more than 5%, which makes the 5% wage increase not so good.

Only 5% of non regular employees said pay increases were larger, which is not that large and not surprising, as maybe many non regular employees might not have gotten a wage increase at all.

But only 7.3% of regular workers said wage increases were enough, which means maybe 86% felt wage increases were not enough compared to increases in inflation.

Most likely those in the 20's and 30's have less financial responsibilities than the older groups and maybe the wage increase gave those in their 20's and 30's more extra income.

And as expected, those in their 50's and 60's with more financial responsibilities felt wage increases were not enough and didn't give them enough extra income compared to price increases.

And yes, as expected, unfortunately, over 70% in the 50's and 60's felt wage increases were not enough to cover the price increases and or didn't increase their extra income.

Yes, the overall wage increases either have not take affect and or Japanese workers, at this time are just sitting on the wage increases and deciding just what to do and maybe many ar still weary of the inflation situation.

For non regular employees its very different story, as they are constantly stressed out by their low wages and or company benefits or a combination of factors.

Yes, some companies might have given good wage increases for non regular workers, but that is not the case with all companies who see non regular workers as just nonessential commodities that can be easily replaced.

The minimum wage situation in Japan, unfortunately like some economies is not so good, as many companies don't want to pay a lot for some workers and they keep the minimum wage low, as companies try to limit their costs.

Have a nice day and be safe!

Japan Company Wage Increases: Updated July 6, 2024.

 

Japan's avg. pay hike tops 5% for 1st time in 33 yrs amid price rises

Article Source:  https://mainichi.jp/english/articles/20240704/p2g/00m/0bu/005000c

Ideas:

Wage increases are good and needed for Japanese workers in Japan, but because Japanese workers didn't get any real wage increases for maybe decades. The 5.1 percent increase is good but Japan still has a long way to go the help workers beat inflation.

Wage increases are good again, but they usually only come once a year, but inflation seems to come almost every month, at least the past few years, so again, Japan needs more wage increases and or the needed or expected bonuses for Japanese workers on a timely basis, which is usually twice a year.

Japanese workers most likely are not going to increase their spending in the Japanese economy until they can see and feel significant increases in wages, which should given them the extra income needed to be used in the economy.

Beating inflation with a increase of 5.1 percent is good, again, but the monthly amount going to actually be more than monthly inflation, which seems to increase every month.

For example, even if inflation only increases 3 percent each month that is every month compared to a one time wage increase.

Japanese households or Japanese consumers, might be reluctant to spend their wage increase as they might still be weary of constant inflation in the Japanese economy.

The problem is many small and midsize companies are unable to meet the same wage increases that the large Japanese companies offer, and as such maybe up to 70 percent of Japanese wage earners don't work for large Japanese companies.

Its understandable that Japanese companies, alone can't save the Japanese economy, and also not all Japanese companies have the needed resources to give wage increases more than 5 percent, but at the same time, no one really knows what reserves Japanese companies have after years of not giving needed wage increases.

The wage situation started back on the early 2000's when the Toyota group decided not to give wage increases, and of course then all Japanese companies did the same thing. 

The rational, at the time, for not giving wage increases was wages in Japan were too high compared to wages in China, because wages were much less in China, some in Japan thought companies would leave Japan and go to China.

Of course that scenario didn't happen exactly, but like most global companies they moved some of their manufacturing operations to China to get lower wages, at the time.

Its interesting that Toyota, all the way back in the early 2000's was the large company that spurred the idea of no wage increases, but this year they have fully met their unions' demands, which of course paves the way for most if not all large companies to do the same thing.

Even at 4.45 percent, at least small and mid-sized companies are going to get something, but will it be enough to beat inflation in Japan.

Small companies passing on their increased costs to the large firms, is always a tricky situation, as sometimes, smaller firms which are suppliers to the large firms, are told in many different ways not to increase costs, and or we will not renew your supply contract for the next year, so many small companies, sometimes, are reluctant to pass-on their costs to the large firm that they supply.

Have a nice day and be safe!

Japan June Consumer Confidence: Updated July 2, 2024.

 

Japan's June consumer confidence improves for first time in 3 months

Article Source  https://mainichi.jp/english/articles/20240701/p2g/00m/0bu/050000c

Ideas:

An increase of 0.2 is really not that much but the Cabinet Office does suggest that its no much as Japanese consumers still can't be happy with what is happening.

Despite all the thinking of Japanese being genki, positive and happy, maybe the last 30 years or so has changed the mindset of Japanese society. Or maybe Japanese society was never all that happy and positive.

It should be remembered that May had 5 weekends and there was the Golden Week period during May which might have helped with consumer confidence as people were out and about and not working for almost a week.

Income growth can also be attributed to slower increase in inflation, which helps with real income as Japanese households see they have a little more extra income as they didn't have to spend as much on whatever.

And yes, there might have been some wage increase affects as Japanese households, or at least the larger company employees were able to see increases in their wages.

But the problem is maybe many small and midsize company workers didn't see as big an increase as the large company workers did, which means the Japanese economy is still and economy of haves and have nots.

Other maybe a few countries globally, many workers around the world might feel their overall livelihoods are not what they want or need to live.

In a market economy increases in consumer prices could be because of an increase in demand of products as consumer are buying more, and its natural for companies to increase prices if consumers think the products are in high demand. But in Japan consumer spending is never where it should be, as consumer spending is always weaker than what it should be.

And then there is the Japanese situation, which Japan is a a resource-poor country and has to import much of what it needs from food, energy, raw materials and so on.

And because the Japanese yen is weak it causes import prices to be even higher than normal. And then of course there is the variance between the US key interest rate and the Japan key interest rate, which also causes the Japanese yen to remain weaker than what it should be.

Finally Japanese consumer confidence might never be like the 1980's and the free spending Japanese consumers, and the world and Japan has changed a lot, and going back to a main idea that Japanese society is not what it was even 10 or 20 years ago. its much different and Japanese society has had to live through many years of no real wage increases and real incomes not where they should be.

Have a nice day and be safe!

Japan Small, Mid-sized Firms Offer Wage Increases: Updated June 9, 2024.

 

Japan small, mid-sized firms offer 3.62% pay hike, below major firms

Article Source:  https://mainichi.jp/english/articles/20240608/p2g/00m/0bu/014000c

Ideas:

Its not unusual that small and midsize companies don't or can't match the wage increases of the larger name brand companies in Japan, as they don't have the same resources.

The 3.62 percent, while better than nothing, probably doesn't offset the continual inflation increases over the last few years in Japan, which means small and mid-size companies employees are still going to deal with continued inflation.

And again, the Japanese economy, is going to be an economy of haves and have nots, but in reality, that is all market economies as not everyone makes the exact same salary, as there those who get higher salaries and those who only get minimum wage.

Real wages are the key and most likely maybe even the large name-brand companies didn't increase wages above the inflation level so real wages are still not what is needed in the Japanese economy at this point.

The weak Japanese yen, and import prices for everyday things in Japan are the main challenges that Japanese households have to deal with. Again, as real wages are not enough, Japanese households have to pick and choose what to buy and what not to buy to meet their current budget situation.

This situation has been a 20+ year situation going all the way back to the early 2000's when Toyota decided not to increases wages, as the corporate leader among name-brand companies in Japan, all other companies had to do the same thing, and or as the saying goes "the nail that sticks out will be nailed down" meaning all companies had no choice but to follow what Toyota did in the early 2000's.

Of course any wage increase is good and needed, but of course more would have been better. And yes, now the smaller companies will need to pass-on their increased wage costs to the next in the supply chain including the companies that they are suppliers to meaning supply costs will begin to increase.

Many, but not all small Japanese companies are actually suppliers to large Japanese companies and they are not usually in a very good position, as some large companies might try to reject the price increases of the smaller companies and may even put pressure on them like it was reported related to Nissan, whether true or not.

That could be one of the main reasons small and mid-size companies, which might be suppliers to some larger companies are unable to increase wages as if they do, and they try then to pass-on their wage increases in prices, large companies might put pressure on them to not do it.

There is a definite labor shortage in Japan, and many companies now are increasing wages as a way to entice workers to change jobs, and of course to not change jobs and stay in their current job.

The service sector, which was hit the hardest during the pandemic, might also be increasing wages as a way to get former employees to come back and or just to get needed employees who left during the pandemic.

Companies might feel they have no choice but increase wages despite the not so good economy and or not so good business performance, as if they don't employees maybe leave and go to a company that is willing to pay higher wages.

Some or many companies don't have labor unions, as maybe there are positives and negatives related to some labor unions.

Part-time workers and contract workers are usually left out of wage talks and they aren't even considered important enough the be considered. But Japan seems to have more than its share of part-time and contract workers and now maybe they are finally being considered, not completely as stakeholders but now maybe a part of the company and can't be ignored.

Again, there are definite labor shortages in Japan and maybe the wage situation might be part of the challenge, as maybe some workers don't want to work for wages that not meet their expectations, such as Japanese university students and working for convenience stores that might not pay what they want or need.

The workers of 30 so years ago are long gone, or the mindsets of the workers back then are long gone, as workers today don't want do the same work definitely don't want to work for low wages offered, so companies are beginning to see and understand they have no choice, to get the best possible workers, or even to get workers period, they need to increase wages.

Have a nice day and be safe!

Japanese Firms and Wage Hikes: Updated June 14, 2024.

 

Japanese firms offer highest pay hike in 32 yrs in spring wage talks

Article Source:  https://mainichi.jp/english/articles/20240520/p2g/00m/0bu/043000c

Ideas:

 Wage increase are good, even more if its over the current inflation rate. And yes, a brain drain is very possible, as even in Japan workers now will move to companies that offer higher wages.

19,480 is a good number but again, will it help to cover the increases related to inflation that many Japanese households are now experiencing.

But the problem is, and maybe mentioned later in this article, that many small and midsize companies didn't give the same wage increase as large Japanese companies.

The average for all companies might have been 3.99 percent while large companies had a wage increase of 5.58 percent, which slows a large variance between small and large companies.

In defense of small and mid-size companies they most likely don't have the needed resources to offer the same wage increases as large Japanese companies.

And then there is the idea, that many small and mid-size companies are suppliers to large companies and large companies might not like the idea of the small supplier companies pass-on their wage increases in prices.

The Toyota group is the company that might have started the deflation situation, when in the early 2000's as a way to remain competitive with Chinese companies, decided not to offer any wage increases and it was that way, mostly up until last year.

And then all companies followed Toyota with no wage increases for many years, which might have contributed to the deflation/inflation situation.

The problem or challenge is, Japanese companies follow the market leader and or the company with the most economic power, which in this case is/was Toyota, so they did what Toyota did with no wage increases.

The sectors mentioned, steelmakers, machine makers, and shipbuilders, are all heavy industry companies and, these days, it might be getting harder to find quality talent to work in these industries and or the companies are not near or in the main metro areas and younger workers might not want to work in a smaller city.

Non-manufacturers, which are usually service sector companies usually have profit margins that can't handle large wage increases.

As I surveyed a well-known hotel business in Japan, and looked at the prices just to see if they have gone up, they have increased significantly. The hotel is a well-known business type hotel but it seems their prices seem very high now.

But it not surprising as the hotel business in Japan is probably doing very good now, and making up for lost revenue during the pandemic.

And of course as demand is high companies increase their prices so it not a surprise that this hotel chain increased it prices.

Anything over 5 percent is good, but again, unfortunately, maybe many small and mid-size companies didn't get the same kind of wage increases.

But whether good or not so good, that is a market economy, where larger companies have more resources and smaller companies don't have the same resources.

The challenge is, as usual, an economy of haves, large companies, and an economy of have nots, small and midsize companies, which is going show up in less consumer spending in the Japanese economy, over time.

Have a nice day and be safe!

Japan Irregular Workers: Updated July 10, 2024.

 

Report on spring labor talks shows Japan's irregular workers mostly left behind

Article Source:  https://mainichi.jp/english/articles/20240515/p2a/00m/0bu/027000c

Ideas:

Irregular workers, by some or many, are not seen as being important in the work place and maybe especially in Japan. Most irregular workers in Japan, are probably women workers and or student workers going to university and can't work full-time. For women, they might be women with children and they too can't work full-time.

But there are those in the work force, who for whatever reason, just can't seen to find full-time, full benefit type jobs, but they are fully capable if given a chance for a full-time job.

Unfortunately, companies try to limit their costs by hiring more irregular workers and limit the number of full-time workers, as much as possible.

It might be good for share-holders and stockers and their stock dividends, but its a negative for an economy if irregular workers are not given good wages.

Not to criticize, but how can companies, in good conscience, give such small wage increases to maybe those who do most of the work in a company.

It just goes to show, even in Japan, the part-time, the irregular workers, are not seen as being important in the workplace.   

Service type companies have very thin profit margins and maybe some of them don't have the resources to give wage increases as needed for their workers, so they do what they can.

The challenge, these days in Japan, is there is a labor shortage, so companies need to increases wages as a way to keep workers and or entice new workers to to work for them.

Unfortunately, there are companies like the Shuppan company that either don't care about their workers or think they can easily just replace that worker if he/she complains too much.

Part of the problem might be related to share-holders and stock-holders who demand a certain profit from the company and the company prioritizes shareholders over company employees.

Irregular workers are at the bottom of the workers hierarchy, and as such don't get much credit for anything, and as such, because their wages are so small they don't spend in the economy and can't do much in the economy.

Its like a entire segment of Japanese society is shut-out of spending and or contributing in any way.

Again, logistics and food industry companies might be service or quasi-service type companies and as such, have very thin profit margins which might prevent them from giving irregular workers with the needed wage increases.

But yes, as seen in the article, there are a few good companies that have rewarded irregular workers and given them wage increases befitting their value as stakeholders in the company.

Japan used to be the exception and regarded all workers as important stakeholders in a company, but those days might be long gone, as now Japanese companies have become too westernized and only think of the share-holder or stock-holder as the most important group in a company, and the workers are no longer value stakeholders but, but for some companies just commodities that can be easily replaced.

Irregular workers are just important for the Japanese economy as are full-time regular workers and they should be rewarded just as much as regular full-time workers with a livable wage, as much as possible. 

But unfortunately, in Japan, maybe many irregular workers are working women who can't work full-time as they are raising children too, and or they work for service companies that seem to claim their profit margins are just too thin to give irregular workers a decent wage increase.

So again, there are haves and have-nots in the Japanese society/economy, and some or many are going to be left out and not able to fully participate in the Japanese economy, and maybe just live on a so-called survivable wage.

Have a nice day and be safe!

Japan Company Retirements: Updated May 7, 2024.

 

Early, voluntary retirement offers accelerate among Japan companies as wage hikes mount

Article Source:  https://mainichi.jp/english/articles/20240427/p2a/00m/0na/016000c

But what an unfortunate situation that companies are asking for some to retire to increase wages!

Ideas:

Many years ago, labor or workers were not really considered a fixed cost and were considered a valuable stakeholders. But today, it seems Japanese companies have transitioned into western style companies with layoffs, early and voluntary retirements, which probably are not really voluntary.

Unfortunately, Japanese companies have been under pressure to increases wages, but they only have so much room in their profits margins, so maybe a combination of increased prices and so-called voluntary layoffs to keep the profit margins in the black.

And of course they have to keep the all important shareholder happy so they forget about their valued workers and focus on the bottom line, and like western companies just layoff their workers.

Again, many years ago the late Peter Drucker, the famous management consultant, always talked about how workers or labor were important stakeholders in a company and should not be considered as a fixed expense. 

At the time, many US companies didn't like his advice so he took his ideas to Japan and Japanese companies liked his ideas about employees being stakeholders and so they treated their employees as important stakeholders for many decades.

But these days, again, those days seem a long time ago and the norm in Japan is layoffs and early retirements and keeping the shareholder happy.

Its quite possible, that maybe some investment firms, which have become a part of some large Japanese companies are driving the early retirement focus, as maybe companies really don't want to do it but a group of shareholders related to the investment firms are forcing companies to layoff and or force early retirements.

For example, as I had contact with large engineering and construction company, the CEO said the worst part of his job is/was dealing with shareholders and investment companies.

It seems that investment companies only have one strategy to reduce costs and that is to layoff workers and or force early retirements.

Maybe the idea of "life-time employment" in Japan is now dead and or its been dead since the asset crash of 1989/1990, which Japanese companies for noted for, or at least the large companies.

Have a nice day and be safe!

Japan Government Report: Updated May 27, 2024.

 

Japan edging closer to ending deflation, pay hikes key: government paper

Article Source:  https://mainichi.jp/english/articles/20240213/p2g/00m/0bu/042000c

Ideas:

The idea that Japan is in a state of deflation might only be in the eye of the Bank of Japan and the Japanese government, as Japanese households and consumers might only see increased prices.

If you take real wages as the benchmark for deflation then yes, it might be correct as real wages keep decreasing while inflation keeps increasing.

But the average Japanese consumer or Japanese household doesn't think in economic terms they only think in how expensive everything has become and they could care less about economic indicators and such.

Yes, there might have been a time, when there was a period of deflation in the Japanese economy most likely due to decreased consumer or household demand and businesses were lowering their prices to keep customers and stay in business. 

But those days were long ago and not the past 5 or 10 years when inflation was the highlight of the Japanese economy.

And yes, since the Toyota wage negotiation incident around 2000 when they didn't increase wages and everyone else followed suit, wages and real wages are not increased very much.

Again, it's quite possible that wages for most workers in Japan have not increased since the the early 2000's as, again, most companies followed the Toyota example or no wage increases. 

And again, if you see real wages as the key indicator for deflation then yes, if wage increases. are not big enough to overcome inflation, then yes, there will be deflation again, in the Japanese economy.

But there is the ideas of constant inflation in the Japanese economy related to products and services then how then can you say there is real deflation in the Japanese economy.

Yes, the Japanese economy is not in a state of deflation even thought real wages keep decreasing and prices on most products in Japan keep increasing, so most likely Japan is in a state of inflation and not deflation.

But again, maybe the powers to be think of wages and real wages as the key indicator for the Japanese economy, and maybe to be fair, for good reason, as many if not most of Japanese workers haven't seen a wage increase for a very long time or maybe for some workers never.

Unfortunately, Japan, in terms of wages, is not even near the top or the top half of wages for OECD countries these days. Its been a long decline for when Japan was at the top in the large 80's but since then a slow decline in most things in Japan.

Japan is a resource-poor country and has to import much of what it needs. And of course the exchange rate between the US and Japan and Japan and the EU has made import prices even higher, which then means import companies pass-on their costs to the next in the supply chain and eventually the final consumer.

The services sector was hit hard by the pandemic and might be increasing prices as a way to makeup for the heavy losses during the pandemic.

At the same time, as Japan is facing labor shortages, service sector companies are increasing prices as a way to pay for increased wages to stay competitive with other sectors in Japan. 

Consumer spending or private consumption might take some time to see any real sustained changes as the mindsets of Japanese consumers have been conditioned to be weary about spending and for the most part, Japanese consumers are not big spenders like US consumers.

If for example, not all Japanese workers get wage increases and only the large company workers get wage increases that is still a large part of the Japanese economic workforce without any wage increases.

For example, it is estimated that 70 or the Japanese workforce doesn't work for the large name-brand  companies but small and midsize companies. If the small and midsize companies don't increase wages near what big companies pay then there is going to be a real miss-match in the Japanese economy related to Japanese consumers.

There are positives and negatives to the work hour schedule in Japan. Some women might want to work more hours while some might like the 20-29 hour schedule.

But yes, as far as taxes and insurance goes it might be a negatives for some or many.

Perhaps the entire wage, tax, and insurance system needs to be adjusted to better fit the working women who want to work more hours as needed these days with a husband and wife both working or needing to work.

Perhaps its time to adjust the system to the 2020's where more women want and need to work. The idea of stay at home mothers, even in Japan, is an outdated, as families, both husband and wife need to work to make ends meet. 

Even today, as the birth rate falls in Japan and more women and men decide to not marry and to just work and move up the ladder in their career, the system needs to change to allow career working the same advantages then men have.

Have a nice day and be safe!

Editorial: Japan Wage Negotiations: Updated April 21, 2024.

 

Editorial: Japan's wage negotiations a chance to revitalize economy with pay raises

Article Source:  https://mainichi.jp/english/articles/20240125/p2a/00m/0op/008000c

Ideas:

Japanese trade unions might want higher pay raises companies might agree with higher pay raises but also maybe some companies are unable to meet the 5 percent pay raise and the 3% or more base pay.

Yes, this is a situation, maybe due to pressure on all sides companies are going to unleash their long-stored up bank accounts and give the needed pay raises.

There are also two other reasons for the increase in pay. One being its the right thing to do for the good of Japanese society and the Japanese economy, and it give Japanese companies some good public relations points.

The next reason is Japan is in a labor shortage now, and for companies to get the best talent possible they need to pay higher wages as a way to ensure to get what workers they need.

The pay raises eventually could be a multiplier effect, meaning as companies begin to see other companies giving pay raises they too will give pay raises, and then more and more companies will follow through too.

And yes, the key is going to be small and midsize companies, as 70 percent of the Japanese workforce doesn't work for the large Japanese companies.

And there are the non-regular workers and part-time workers who are a significant number or workers in the Japanese economy too.

Japanese companies need to see these workers as being significant stakeholders and not just insignificant numbers to be used and thrown out.

Wages or salaries in Japan are some of the lowest among OECD countries. If Japanese companies had not adopted western style cost cutting measures and given regular pay raises each year, maybe the Japanese economy might not have been in the situation its in today.

Unfortunately, they have prioritized stockholders over employees and employees have not been given the wages or salaries they deserve.

And the worst part is large companies taking advantage of smaller subcontractors by not giving the prices they want or need for their products.

Japan used to have a structure that benefited employees and subcontractors with respect but those days seem long gone as companies place profits and stockholders over the benefits of stakeholders, being employees and subcontractors too.

Expanding investment into people is now the future and the outdate style of business is not going to work with young workers today.

News spreads fast, both good and not so good and if young workers know a company is not offering good benefits or good salaries or a good work/life experience, others will know and not apply to that company.

All stakeholder, these days need to be considered and not just regular workers, but subcontractors too and they too can spread information both good and not so good.

Wage increases need to be permanent and continuous and not just a one-time situation and then the next year forgotten. If not the Japanese economy is going to be an economy of haves and have-not and the Japanese economy is going to be unbalanced and consumer spending will never reach its potential.

Have a nice day and be safe!