Japan Real Wages: Updated April 11, 2024.

 

Japan real wages fall in February for 23rd month, down 1.3% on year

Article Source:  https://mainichi.jp/english/articles/20240408/p2g/00m/0bu/008000c

Ideas:

Real wages are wages without inflation, compared to nominal wages, which includes inflation, as Japanese companies have not been able or not willing to increase wages, inflation continues to be a more factor in the Japanese economy.

Only when companies are able to increase wages to the level that they are above the inflation level, households and workers will be stressed with inflation cutting into their extra income.

Perhaps, finally in April for 2024, companies can and will increases wages to the level that inflation is not so strong in the Japanese economy. But all companies, large and small need to increase wages for the full effects of wage increases for everyone in Japan.

Japanese business leaders may be willing to increase wages but they might not be able to do it depending on their profits margins and how much they can increase prices on their products to offset wage increases.

At the same time, maybe many small and midsize companies want to increase wages, but again, their profits margins are too compromised due to continual increases in raw materials and energy costs.

So Prime Minister Kishida can ask and plead all he wants but the final decision comes down to what companies can do in the final analysis.

Price increases might be decreasing but they are probably still too much for the normal family in Japan, and probably will remain too much unless a family gets a wage increase in the future.

All companies need to participate in the wage increases and if not Japan is going to have a two-tiered wage system of haves and have nots based  on large companies able to give wage increases and small and midsize companies unable to do so.

The result will be an unbalanced economy and an economy that operates below its potential in the near future.

But unfortunately, that is the makeup of a market economy, which has a lot of haves and have nots but the goal of any market economy is that all can achieve some kind of quality of life which includes a good salary.

What a company agrees to and what actually happens are too different situations as there might be "small script" or fine print writing related to wage increases and workers might not actually get  a 5.24 percent increase when all is said and done.

Even at 282,265 wages in Japan are much lower than many OECD countries as Japan has some of the lowest wages among advanced countries. It just shows how much Japan has changed since the 1980's or early 1990's when Japan was one of the richest OECD countries in the world.

Most likely, as some might say it, but maybe Japan grew too fast too soon after WW 2 and was only focused on economic growth or growth in foreign markets for their exports companies and didn't focus on the fundamentals needed for long-term financial or economic success.

Even at 360,00 yen that is not so much compared to other OECD countries. But at the same time, one positive related to Japan is that its executives and CEO's are not paid out of this world huge salaries that are seen in the US and Europe which is out of control for top executives. So in that sense, Japan is a more humane society that keeps its executives in line with normal salaries and not the "rock star" type salaries of the US.

What isn't mentioned is how many overtime hours do Japanese workers have to work and or are required to work, which usually is much more than in the US, and sometimes without compensation.

In Japan and elsewhere, most likely part-time workers makeup a significant percentage of workers in Japan now, including maybe contract workers or workers not on full-time full benefit contracts. This can have a huge affect on consumer spending and other economic activities in an economy overall.

The total working hours of 135.1 is not very clear as is that the total of both full-time and part-time together?

What Japan does, which maybe the US doesn't do is have bonuses twice a year which compensate workers, which makes up for the lower salaries in Japan compared to the US.

But overall, the Japanese wage system seems a more humane system compared to the US system, as there are few lay-offs or those fired in Japan compared to the US. Yes, the wages might be lower, but the employment system seems more humane compared to the hire and easily laid-off or fired system that exists in the US.

Have a nice day and be safe!

Japan Feb. Household Spending: Updated April 6, 2024.

 

Japan's Feb. household spending falls 0.5%, down for 12th month

Article Source:  https://mainichi.jp/english/articles/20240405/p2g/00m/0bu/016000c

Ideas:

Household spending, should just be a about consumer spending, and not so much about paying bills such as utility bills. But, of course, spending on utilities needs to be tracked to see how much households spend.

Of course there are positives and negatives related to household spending such as warmer temperatures in last winter might bring less utility spending but in the summer warm temperature might bring more utility spending as households increase the use of air-conditioners.

And then of course the continued inflation situation with households cutting back on some items to reduce their overall spending. So there are always positives and negatives, depending on the situation in an economy with household spending.

As the Japanese government has been implementing energy subsidies for households, maybe the subsidies are beginning to reduce overall spending on utilities in Japan too, besides a cutback on utility spending due to warmer weather and so on.

The spending on furniture and other household products, including durable goods, usually, are not daily necessity needs and might be bought once or twice a year, if at all in a year.

Stoves and heaters, as durable goods are definitely only bought once a year, if even then. How many stoves ore heaters do households need where they need to buy them every month for example.

Spending including social expenses dropped 4.8 percent, while transport and communication expenses decreased 1.1 percent, affected by a halt in production and shipping of cars following safety test rigging at Toyota Motor Corp. group firms.

Meanwhile, spending on food, which accounts for about 30 percent of household expenditures, climbed 2.0 percent, marking the first rise in 17 months, driven by an increase in dining out and purchases of beverages.

Social expenses could be anything and everything related to parties, trips, and so on, which might have been reduced due to increased inflation in Japan. 

The Toyota Motor group, the largest car maker in Japan, has had some challenges recently due to quality control challenges and had to reduce production for a few weeks to get things sorted out, including one of its subsidiaries, the Daihatsu company.

Food, for the most part, has always been a major expense for most households globally, and for the lower-income groups, the percentage related to food might be higher than 30 percent.

Of course as the weather begins to improve, and the Hanami season begins, maybe more people are out and about and going to restaurants more this spring.

But at the same time, despite the beginning of the Hanami season, maybe inflation is reducing some activities of some people and maybe they are not taking long trips and or going to hotels, and or eating out as much as before the pandemic or before inflation hit the Japanese economy. 

Private consumption in Japan might be more than half of Japan's GDP, but it seems that consumer spending is never where it should be in Japan for several reasons.

For one, maybe, as many Japanese workers haven't received a pay raise in many years, that has reduced consumer spending in the economy.

Second, is the ideas that Japan has begun an aged society and older workers, especially those on fixed incomes, tend to spend less.

Third, which might be related to the first idea, is more and more young Japanese workers are contract or even part-time workers, who might spend less due to their anxiety about a good job and or a good salary.

And fourth, is for the most part, Japanese overall are more savers than spenders such as those in the US who are, for the most part, more spenders and not savers.

And then there is the psychological mindset, meaning as consumers/households are constantly bombarded with not so good news about the Japanese economy, it become a self-fulfilling prophecy which leads to less spending in the Japanese economy. 

Have a nice day and be safe!

BOJ View of Regional Economies: Updated April 7, 2024.

 

BOJ cuts view on 7 of 9 regional economies, notes strong wage growth

Article Source:  https://mainichi.jp/english/articles/20240404/p2g/00m/0bu/036000c

Ideas:

Just like a market economy, and different sectors, some better than others, the same with prefectures or states in Japan. Some might be doing better than others, which is normal in any market economy.

Of course private consumptions of consumer spending is normally not as strong in Japan as it is in the US, but the inflation situation has caused less spending than normal for this time of year.

And then add in weak auto production, which is a major economic driver in the Japanese economy. An economic driver is any economic activity that that increase economic growth significantly, and in this case auto production is a strong driver of economic growth.

The weak auto production situation might be related to the Toyota group and Daihatsu and their quality control challenges.

Hokkaido and Shikoku are relatively less strategic when it comes to Japanese companies and the Japanese economy, so there might not have been enough change up or down for them to be included up or down.

Of course the Hokuriku region of course will continue be downgraded due to the earthquake, and it might take some time, maybe a year or more for the region to get back to normal or near normal.

Nonmanufacturers or course are positive about what is happening in the Japanese economy, with hordes of foreign tourists coming to Japan and spending a lot of money, due to the weak Japanese yen, as foreign tourists have more purchasing power.

Manufacturing companies, large and small, are rarely that positive and their focus seems to be related to the global economy and maybe even what is happening in China, as China, at this time, is not where it should be economically.

Weather, warm or cold, of an extreme either way, seems to affect consumer spending, and in this case, a warmer winter reduced spending on winter clothes. Of course major retailers, like Uniqlo plan months if not years ahead, and they sometimes have no way of knowing exactly what the weather might be each summer or each spring.

They can of course make estimates, but based on normal weather expectations, which means maybe many clothing retailers had to have a lot of sales to reduce their winter clothing inventories.

The Toyota group, and Daihatsu which is a small manufacturer of the Toyota group, has had some quality control challenges and maybe even miss-representing it quality control data, and when it was discovered the Toyota group was forced to reduce manufacturing in some of its plants.

The Japanese economy might be recovering overall, but it seems like its constantly it a recovery stage and never seems to get past the recovery label into something better.

The key interest rate hike by the Bank of Japan, was probably not that significant, at this time, as they are not going to increase the rate too much because of possible side effect, which might hurt the Japanese economy.

All companies need to participate in wage increases including small and midsize companies for the Japanese economy to fully get to the 2 percent inflation level, away from inflation related to just companies passing on their costs to the next in the supply chain.

Services is the bright spot in the Japanese economy at this time, which is not usually the case as services were hit had during the pandemic and lost a lot of jobs due to layoffs and businesses closing.

The case might be made, that if Japan was not in a labor shortage situation, maybe some or many companies would not be offering wage increases to attract new or enough workers for their companies.

Core inflation might be in Japan for sometime and private consumption or consumer spending might be somewhat reduced for a while, unless of course many Japanese wage earners begin to spend some or all of the extra wage earnings, but that is not likely as most likely Japanese households will hold onto their extra income and use to pay for the basics such as utilities.

As the Hanami season is now in full bloom, and Golden week, the first week of May, which is week long holiday, their could be a surge in spending, but it remains to be seen if Japanese households will really spend a lot during the Golden Week period.

There is also the idea that once companies do increase wages, they need to pay for the wage hikes and most likely they will increase prices on their products.

And then there is the situation with small companies increasing wages, even though their profit margins might be compromised they might have no choice but to increase wages, to keep up with other companies or competitors in the same sector in terms of securing the best talent possible for their company..

Wage increases might not end the cycle of deflation, but its a good start, And then there is the idea of continued inflation that will replace deflation with price increases due to the wage increases. 

So a combination of continued inflation and wage increases, which will increase prices on some products, might move the Japanese economy from the deflation stage to the inflation stage in the future.

Have a nice day and be safe! 

Hitachi: Free Dress Code Ceremony: Updated April 5, 2024

 

Hitachi holds its 1st 'free dress code' entrance ceremony aimed at respecting diversity

Article Source:  https://mainichi.jp/english/articles/20240403/p2a/00m/0na/003000c

Ideas:

Japan has opening and closing ceremonies it seems for everything. For example, most if not all US companies, and maybe EU companies too, don't have beginning of the year ceremonies for new hires, as most probably hire year-round and not just for once a year for new hires.

Japanese companies, for too long, were stuck in a traditional mindset that didn't value diversity or change, but it seems now, as Japanese companies see the need for improved work/life experiences, some Japanese companies are showing signs of changing.

Many younger workers don't want the same experience as their parents did with long work hours at boring/dull offices with little change related to lifestyles or life experiences.

Hitachi traditionally has been a kind of blue-blood Japanese company, meaning tradition has been a major part of the company culture, but it seems they are now changing to meet the needs of the new Japanese worker, and also to make sure they can be attractive enough to get the best talent possible in the future.

Not all new workers/rookies are going to go against the grain of non-traditional business suits, as they don't want to stand out too much, so if other companies do the same thing, most younger workers will continue to wear suits as a way to fit in with the corporate culture.

Fitting it is a major part of Japanese society and the Japanese corporate work culture, and if they stand out too much, they might feel out of place and not be seen as part of the group.

Hitachi is still a traditional Japanese company, and just because the president says something in the opening ceremony, doesn't mean that all things are going to change at the company, as its still business as usual, or Japanese business as usual.

For example, for a while in the US Fridays were considered business casual or smart business dress days and maybe at Hitachi, they will implement certain days each month were casual dress is considered normal, and where employees don't need to wear business suits to work on those days.

But at the same time, meeting with clients or customers, business suits will still be the norm as business suits is still the norm when meeting other business people and or customers and clients, while in the office, away from customers and clients, casual dress might become the norm.

Most likely older Japanese workers will continue to wear the traditional business suit while younger workers might choose a more casual approach in the office.

Have a nice day and be safe!

Japanese Employees and Employers: Updated April 4, 2024.

 

'If I warn them harshly, they'll quit': Staff training creates headaches for many in Japan

Article Source:  https://mainichi.jp/english/articles/20240401/p2a/00m/0bu/023000c

Ideas:

This might be a normal situation globally, as the younger generation of workers don't see exactly what senior workers see or want the to do. 

This is nothing new as its been going on forever, with each new generation of workers now wanting to do things differently and now what senior workers want.

But in Japan there seems to be more rigidity and formality in doing things that maybe the younger Japanese workers don't want to follow these days.

Communication has always been a challenge between young and old and maybe even the pandemic has made the situation much worse has younger workers don't seem to have the communication skills needed for the global or even the Japanese workplace today.

But you can't blame the younger generations for wanting to do things differently, as maybe some Japanese business practices are outdated and rigid compared to what is normal for some younger workers.

At the same time, there is always the need for basic communication skills and proper manners no matter what the setting.

Also, unfortunately, some or many young workers, globally, just don't have the correct manners or don't know what the correct manners are for business and for communication.

Its a global situation, and its even become pandemic in less than good manners globally among young workers.

For example. using a smartphone and when to use it, but today many young workers can't live without their smartphone in their hand and have to look at it sometimes 24 hours a day.

Many or some younger workers are very good as multitasking but not so good at focusing or concentrating on one task to get it done correctly.

So its understandable if older workers, who are responsible for training new/younger workers feel frustrated when younger workers don't want to do what they say, and get upset and quit if there are too many rules or too much rigidity in the workplace.

At the same time, companies need to change to fit or find compromises that can make younger workers feel more comfortable in doing their jobs without a lot of stress, if not that company might get the reputation as a not so good work environment for younger workers.

Its not just in Japan, but it seems to be a global challenge today between older workers and younger workers about what each group expects or want from the other.

Most likely business skills are the least important part of training new employees as maybe communication is the number one skill that young workers need to improve on, as maybe social media, the pandemic and smartphones have resulted in a whole generation of younger workers with the worse communication skills ever.

And again, its not just Japan, but young people today, for many or some, are like "snow-flakes, as they can't handle correction, as they have been pampered their whole life and never had to deal with any form of correction in any form and when they get to the corporate workplace they can't handle correction or training related to communication skills.

Good manners should be a given in any situation and not just in the corporate workplace. And it should be learned at home and reinforced in the school setting.

But today, many parents, and society only think about grades and not the complete person, and good manners is far down the list of what is important today, unfortunately.

Its unfortunate that companies have to spend time or dealing with skills dealing to good manners as it should be a norm for all things in society and not just in a business environment.

Good manner training starts in the home, again, and should be reinforced in the early years of schools, but most parents are either too busy or have given up trying to educate their children on good manners.

Again, if younger workers, by the time they become new corporate employees don't know the importance of good manners, its a complete breakdown of society, and, again, its a global problem and not just a Japanese problem.

Of course Japan is a so-called polite society and even more so in corporate business but many young people either don't care and or have never been trained at home or in the schools what is good manners, but its the same globally, again, and not just a Japanese problem.

I feel empathy for the older workers trying to teach the younger workers what do related to good manners, but unfortunately, many younger workers might reject anything an older worker says to help them improve.

Have a nice day and be safe!

Big Company Sentiment: Updated April 13, 2024.

 

Japan big makers' sentiment worsens for 1st time in 4 quarters: BOJ

Article Source: https://mainichi.jp/english/articles/20240401/p2g/00m/0bu/002000c

Ideas:

There seems to be two indexes being mentioned here. One related to business confidence of manufacturers moving from 13 to 11 and then another index moving from 34 to 32. Perhaps one index is related to manufacturing and another related to non-manufacturing.

The Toyota group situation, and their quality control challenges with Daihatsu, forced a shutdown of some of the Toyota plants. But a decrease from 13 to 11 is not that big a deal, as it was not good in the first place.

The non-manufacturing index has seen an uptick of confidence due to services seeing a surge in activity and or course a huge surge in foreign tourists going to Japan.

As consumer demand and consumer spending has improved significantly, service companies are able to pass-on their costs to the consumer without fear of losing customers or too many customers.

All indexes need to be taken with a grain of salt, meaning not all companies see the exact same things or feel the exact same things in the economy.

The Bank of Japan might have had its first rate hike since 2007, but does the average public feel anything different or do companies feel anything different yet?

It might take some time for the key rate increase to have any real affect on the Japanese economy, and then the affects might be so small that no one really notices anything.

Deflation is not going to end just yet, just because the BOJ increased the key rate. Its going to take some time for all in the Japanese economy to see any real affect related to deflation or even inflation.

The idea, recently, that the Japanese economy was in a state of deflation might have been a slight misunderstanding as companies have been passing-on their energy and materials costs for the last few years, which is a sign of inflation and not deflation.

Yes, for a period, there were times of lower prices and periods of companies not passing-on their costs to the next in the supply chain, but most likely those days were gong a few years ago as companies felt they had no choice but to pass-on their costs to the next in the supply chain, including the final retail customer.

The Bank of Japan is not going to do anything do drastic to upset the financial markets, and most likely they are not going to increase the key rate too fast or too much, preferring to take a step by step approach to see how their rate increases affect the economy. 

There are side affects to increasing the rate, such as borrowing costs, and existing loans, which can be affected with increasing the rate.

But as the BOJ key rate continues to increase overtime, it will come more in-line with the US rate, which means the Japanese yen, could become stronger, which is good for the importers and the domestic economy, but not so good for Japanese exporters and foreign tourists going to Japan, as a weaker yen give tourists more purchasing power.

But the BOJ is well aware of how the weak Japanese yen affects the Japanese economy, exporters and foreign tourists and they most likely will take them into account when they decide to increase the key rate again.

Perhaps Japan has finally reached a point where it can see light at the end of a long inflation/deflation/stagnation tunnel and things will continue to get much better.

It might be the beginning of a surge in economic growth that Japan has not seen in a very long time. For example most the time, the Japanese economy only grows 1 percent, at the most, and with the wage increases and an increase in business confidence and business investments, there could be some significant growth, such as 2 or 3 percent which would be very significant for Japan.

Of course, it all depends on what Japanese consumers feel with the proposed wage increases and will all companies participate in the wage increases?

The Japanese holiday period called Golden Week the first week in May, will be a key indicator of what is really going to happen. If there are a lot of Japanese citizens traveling during Golden Week and many going to places and spending, that is a good indication that the economy is maybe back on track for the first time in a long time.

But if Japanese citizens decide to stay home, not travel, and not go out to restaurants and so on during the Golden Week period, that too, is a sign that the Japanese economy, is still not there yet.

Its never appropriate to say that key figures or data is changed, but its better to say data is always being revised as new data comes into focus, which is probably what happened, for the final quarter of 2023.

Sometimes an economy can become unbalanced and relies too much or a few key economic drivers such as in Japan auto production and the Toyota Motor group.

For example in South Korea, the reliance on a few large companies and a few economic drivers such as exports and semiconductors.

For Japan, yes Japanese cars are a major export driver, and maybe Japan is too reliant on auto exports for economic growth and needs to balance out its economic growth base, so that if Toyota and or other car companies have challenges the Japanese economy doesn't contract due to one or two economic drivers that had some bad quarters of growth.

For example, the Japanese semiconductor industry, 30 years ago, was a market leader, but it lost out to Taiwan and South Korea, But recently the Japanese government has been investing in the semiconductor industry and with cooperation with TSMC, the main Taiwanese company, they are building new plants in Japan to increase Japan market share.

But its going to take time for the Japanese semiconductor industry to see any real market share growth.

As indicated, inflation is not going away in Japan, and the idea of three to five more years it probably correct, as companies will continue to pass-on their costs to the next in the supply chain, including passing-on wage increases.

The BOJ's goal of 2 percent inflation has to do with consumer demand and consumer spending and not so much companies passing-on their costs to the next in the supply chain.

Yes, the BOJ is going to be very cautious and not increase the rate too much, as they want to see what affects small changes will have on the Japanese economy, after years or the low rate.

It might takes months for businesses and consumers see an affect related to the key rate increase. In the past the BOJ didn't seem to want to do much for concern of possible side affects related to rate increases such higher borrowing costs and higher rates for existing loans, which could place a lot of stress on business and consumers.

The Japanese yen, may surge again, which it did and has in April of 2024, but the BOJ has delayed any action, again, because of possible side-affects to any actions they might take.

There are positives and negatives to the labor shortage in Japan. For workers it might be mean the possibility of higher wages but for companies it might mean they will be forced to automate and actually use less labor. And again, there are positives negatives to both sides of the issue, automate or pay more for workers?

Yes, an lack of labor can be a real negative for the Japanese economy, as there will be less consumer demand and less consumer spending in the Japanese economy, and those workers who don't get jobs or good jobs in the economy, could be a burden on society and not be full functioning working members of the Japanese economy.

There has to be a balance, in any economy between good jobs and labor and automation and too much of either leads to an unbalanced economy.

In the past maybe Germany and Japan were excellent example of balance economies between small and large companies having similar working conditions, but that has changed a lot related to Japan these days, and maybe large Japanese companies have too much power or market share and small companies are unable to keep up because of less resources available.

As a result, now maybe Japan has become more like South Korea where large companies have all the power and have better benefits and smaller companies have less power and less benefits and or course better salaries for large companies not so good salaries for small companies.

Unfortunately, its only natural for younger workers to want to work for the large companies that provide better wages and benefits but not always better working conditions.

Have a nice day and be safe!

Japan Core Inflation: Updated April 17, 2024.

 

Japan's core inflation accelerates again to 2.8% in Feb.

Article Source:  https://mainichi.jp/english/articles/20240322/p2g/00m/0bu/008000c

Ideas:

Most central banks, like the Bank of Japan, want to keep inflation between 2 and 4 percent, as they feel its manageable. If inflation is only 1 percent, it might mean there is not enough economic activity in an economy. If its about 4 percent, or more, it might mean inflation is too much and prices are too much for regular households.

Government subsidies can only do so much or only cover so much, as governments can't do everything to help society or the economy.

The reason fresh food is excluded in more core consumer price indexes fresh food can be very volatile, meaning prices can change a lot depending on supply and demand.

Inflation sometimes, like it can have a mind of its own, meaning once it start to increase or accelerate, its hard to slow it down.

Core-core CPI might be slowing but most likely, its still too high for many Japanese regular households, and definitely too high for fixed income households.

The Bank of Japan seems to be relying on Japanese companies to increased wages above the inflation level, but the challenge is getting all Japanese companies, large, midsize, and small companies to increases wages.

Last April, 2023, it was reported that mostly large companies increased wages but not many small and midsize companies were able to increase wages for their employees.

If all companies don't increase wages there is going to be a two-tiered system of wages in Japan of haves and have-nots over time.

Even though Japan has used an unorthodox strategy to try and end deflation, to be fair and honest, it doesn't seem have helped that much. But the same can be said about the US and its increased in the key interest rate, and maybe it didn't really lower inflation that much too.

Food prices can be attributed to the weak yen, less than good growing seasons, and overall general inflation and companies increasing prices.

Durable good prices might be attributed to energy and or material price increases as companies pass-on their costs to the next in the supply chain.

Cost-push inflation or companies passing-on their material or energy costs is now a common situation in Japan, for many years, companies were reluctant to pass-on their costs to the next in the supply chain, including the final retail customer for fear of losing a significant number of customers.

Energy prices are subject to global energy prices and the weak Japanese yen, as Japan is a resource-poor country and has to import much of what it needs.

It seems, maybe, Japan doesn't have any trade agreement with energy producing countries, which maybe can help in reducing its energy costs.

Services, in Japan, were hit hard by the pandemic with many layoffs and closing of businesses, and maybe many service companies have not been able to get back to a staff level like before the pandemic as maybe some or many former employees have moved on to other jobs in Japan.

At the same time, maybe many service companies have increased their fees to try and makeup for losses during the pandemic. And also at the same time, maybe service companies have had to pay higher wages just to get their staff levels back to normal.

Inflation might be slowing in some products in the Japanese economy, but again, inflation might still be too high for many in the Japanese economy.

Again, accommodation companies such as hotels and even restaurants might be increasing their prices as a way to makeup for lost profits during the pandemic period.

And also, as demand increases from an increase of foreign tourists, its only natural that some businesses will increase their price to take advantage of the increased demand.

And again, all Japanese companies, large, midsize, and small need to cooperate with wage increases so that all wage earners in the Japanese economy can benefit.

The Bank of Japan is going to keep its strategy of twerking the Japanese economy, as needed to make sure the economy can finally get out of its deflation state and inflation state, and its like a two-edged sword that the Bank of Japan has to deal with at the same time.

Have a nice day and be safe!