Editorial : The Japanese Economy and Inflation: Updated October 29, 2024.

Editorial: Japan's parties must provide fresh economic vision for inflation-hit populace

Article Source:  Article deleted by mistake:

Ideas:

But at the same time, prices continue to remain high for many many months in Japan, as there doesn't seem to much hope for Japanese households get back back to some kind of normalcy.

Japanese households are struggling, and it seems like, of course maybe not true, but the Japanese Diet, doesn't seems to be in touch with with the average Japanese household, as most of them are probably very rich or close to it.

Wages might have have increased at a rate not seen in 33 years, but it must be remembered, that 70 percent of Japanese wage earners don't work for large Japanese companies, and the small and mid-size companies might not have gotten the same wage increase as the large company workers.

Yes, as the article suggests, its only the large company workers who got the wage increases, and as usual everyone else including up to 40% of the workforce didn't see the wage increases.

But unfortunately, that might be global, as large company workers worldwide enjoy the benefits of the market economy, while everyone else might not see the same benefits.

Non-regular workers, again, which makeup 40% of the work force because companies are cutting costs and not highering full-time full benefit workers, as even Japanese companies have gone to western style governance and trying to keep the stockholder happy, and not really thinking about its workers.

Its very unfortunate that companies try to take advantage of workers, while maybe giving them a wage increase, but then cutting their hours to keep their costs down. Its very immoral and unethical that the only thing they think about is the bottom line and not the welfare of their workers.

Of course they probably know she is not going to complain and that might cause her to lose her job or have her hours cut even more.

This situation with the family with two young children is very sad, and Japan used to be known, somewhat as a rich country, but not any more, as there might be many young families in Japan like this that are barely getting by if even that.

Most likely, maybe Japanese companies, in reducing costs and being more like western-style companies they have gone too far in cutting costs, as at one time, maybe before the asset bubble crash of 1989, companies took care of the workers and paid wages that didn't put families in despair.

Its seems obvious that the Japanese government either doesn't know what do to about the situation and or they can't care about the 40% of workers who might be non-regular workers as that is a large portion of the workforce, but because of increased expenses and low wages they are not really participating in the Japanese economy.

If 40% of the Japanese workers in the workforce are non-regular workers, again, that is a large group of workers that don't have a voice in the economy, by that meaning they don't buy like large company workers in the Japanese economy, and no wonder consumer spending in the Japanese economy is never where it should be.

All politicians, globally, always promise many things but hardly ever really follow up on their campaign pledges, 

At one time, Japan might have been headed toward being like some Northern European countries, with a large share of its population somewhat well-off, but those days seem to be long gone, as now maybe even some up and coming developing countries have surpassed Japan in terms of its population being somewhat above the poverty line and well off.

But to be fair, Japan is still a somewhat rich country, but at the same time its inequality has grown more and more since the asset bubble crash of 1989.

There might be a significant number of Japanese now living at or near the poverty line despite the image of a rich country.

Japan has an ageing population problem and yes, they need to keep the social security situation under control. There might not be any easy solutions to solve the debt problem in Japan, as yes, the sales tax, while not liked by many, might be needed as maybe Japan doesn't have any other possibilities besides the sales tax.

Unfortunately Japan has the highest debt to GDP ratio in the advanced world now, with it getting even bigger with every year.

But the only thing is the debt that Japan has is mostly owned by Japan, and mostly owned but the Bank of Japan, as Japan is not in a place like Greece was in 2010.

So Abenomics and trick-down economic growth didn't work like it should have as the small and mid-size companies didn't see the benefits of Abenomics.

Small and mid-size companies, with good intentions can't help or pay their workers wage increases like the large companies can.

Back before the asset bubble crash of 1989, most likely, many small and mid-size companies had better wages and better benefits maybe even comparable to some large companies, but again, those days are gone. as there are huge gaps, now between small/mid-size companies and large companies in Japan.

Its seems, unfortunately, Japan is spiraling down, more and more, with its income inequality getting larger by the year.

It seems Japanese politicians have no ideas really what is going on and or they really don't know how to solve the challenge that many Japanese households are facing.

It's possible, that Japanese politicians are scared of large Japanese companies as maybe they have too much power now, and don't want to force them to give good wages to the non-regulars workers, which, again, might make up 40% of the Japanese workforce.

All of the above ideas are good and very much needed in Japan as the disparities are huge and can no longer be ignored.

And yes, there will be no real healthy economic growth until the disparities are fixed, but fixing is the challenges will be difficult, as maybe the Japanese politicians don't have the strength the do what is needed for the Japanese economy and society.

Maybe many small and mid-size companies know and feel their employees are struggling but they can't do anything about it as their sales are too low and their costs are too high at this time.

And yes, if the average Japanese workers's anxieties are reduced they might begin to participate more in the Japanese economy with buying more products and even buying more from small and mid-size companies too, but its not going to happens unless the average Japanese feel good about their wages and can see and feel and decrease in their expenses.

South Korea has had the same problem for many years, as the South Korean government, over a period of 5 years or so, implemented increases in the minimum wage, and to help small companies, they gave the subsidies as a way to help them cope with the increased minimum wage.

But the subsidies didn't help that much, as they unfortunately reduced the hours or workers, or didn't hire new workers, or even laid-off workers.

Some even started using more un-manned kiosks in their businesses as a way to reduce labor costs.

Japanese politicians, again, might not have the resolve or strength to do what is needed, as sometimes there are just too many competing factors involved. They might have good intentions with good ideas, but they never are implemented.

And yes, again, most likely many small and even mid-size companies are just getting by, if even that, and they can't handle increased labor costs at this time.

Have a nice day!

Japan University Graduates and Jobs: Updated Oct. 25, 2024.

Almost 96% of 2025 university graduates in Japan receive job offers: company survey

Article Source: https://mainichi.jp/english/articles/20241016/p2a/00m/0bu/016000c

Ideas:

Its very good that Japanese students can get many offers, with upwards of 96% getting some kind of offer. It indicates, maybe there is a labor shortage in Japan and companies are looking for workers.

But to be fair, what size companies students getting offers from. Are they large name-brand Japanese companies or are they small and midsize companies too.

And has been mentioned in other articles recently, some students who got offers soon quit as they couldn't adapt to the company work environment.

How many of these graduates are going to be with the same company after 5 years, or after 10 years and so on, as changing jobs has become more common in Japan as company workers don't want to be with the same company their entire working life.

In South Korea, for example, many university graduates don't want to work for a small and mid-size company as the salary and benefits are very much different, so many graduates, instead of taking a job at a small company, they might take up to year or more and continue to look for that big company job, such as Samsung.

It is estimated that there are more than 500,000 graduates in South Korea, just looking for jobs even though they have graduated.

It has also been suggested that some Japanese companies, not all companies, put a lot of pressure on graduates after giving them an offer not to change their minds.

The Japanese government has tried to crack-down on such companies but without much success, as it continue to happen.

So some graduates are using a kind of employment agency that helps them tell the company that have changed their minds and or those already working for a company to help them quit without a lot o pressure from the company to stay and continue working.

Today's graduates are very different from the graduates of 20 years ago, as they are more picky and don't want to work like their fathers did with long hours and maybe even weekend work.

Many graduates are looking for better work-life experiences and not looking for traditional rigid Japanese work culture, like their fathers had to endure.

The more a company can show the real example of what it will be like working in that company, the better chance graduates might consider that company. They are looking for transparency into what a company can do for them with good work-life experiences.

Have a nice day!

Japan Trade Deficit: Updated Oct. 23, 2024.

Japan trade deficit in fiscal 2024 1st half widens 14.4% on weak yen.

Article Source was deleted by mistake.

Ideas:

Until the yen become stronger most likely Japan is going to have a trade deficit as its a resource poor county, and has to import much of what it needs and as a result the weak Japanese yen will continue to increase import prices.

Japan is strong export focused country but for now the exports are not able to overcome the trade deficit even though there have been record exports.

Export volume might have been larger than import volume, but again the weak yen throws everything out of whack related to international trade and the Japanese current account.

Computers from the US. might not have actually come from the US but a US product made in China such as the Apple Mac Book, which might be manufactured in China, as for computers Apple is the most popular in Japan as is the I phone.

Japan, it seems, has gotten back into the semiconductor equipment and chip making business after losing market share to TSMC in Taiwan and Samsung in South Korea.

And yes semiconductor chips as again become a key export product for the Japanese economy and should continue to see solid growth in the future.

You can never count out the US, as its still the strongest economy in the world at this time and there seems to really not be any other economies that can match the US. There might be some bumps here or there but there should not be anything significant in the future.

China is a very different situation as maybe its going through a situation similar to what Japan did after it grew a lot in the 1980'as. China seems to have grown fast, maybe too fast, but maybe it has leveled off and its having some real challenges as this time.

Japan seems to be stuck in some kind of stagnation as it economy just to be very stable but at the same time never really grows that much as it might reach 1 percent or not even that most years.

As the data shows trade with the US is still robust and most likely will continue to be strong despite some who say the US is headed for a slow-down in the future. 

And has shown in the data trade with China is still on-going but of course not at the level that it was before the pandemic.

Japanese companies just need to stay the course and continue to ship to China maybe someday the largest or second largest economy will find it footing again and get back to normal or some kind of new normal for China.

The Asia-Pacific region is a large area with a  huge population so trade with countries in the Pacific area should continue to be strong as the data suggests.

However something is going on with the European Union and maybe its not just the Ukraine war as trade with the EU just isn't what it used to be.

The growth of imports of course can be attributed to the weak Japanese yen, as maybe the volume was not that much as maybe in line with the export volume from the EU.

The Bank of Japan has to decide what is best for the Japanese economy. Is it the domestic economy or is it the export focused part of the Japanese economy. The Bank of Japan seems to not be able to balance out the concerns of both groups at this time.

But to be fair, its seems the BOJ is unable, yet trying to rein in the weak Japanese yen. But again, to be fair, the BOJ doesn't want to be seen by the US as a currency manipulator, so whatever it does its keep behind closed doors and it never really talked about.

So importers feel the weak yen, and so do retail customers in Japan, while export companies feel the weak Japanese yen too but with increase profits from overseas.

The Japanese yen seems to be on a roller coaster ride, as of late, which makes companies both import companies and exports companies very uncomfortable as they sometimes don't know how to plan or manage the Japanese yen situation.

Its especially hard of small and mid-size companies who don't have the resources needed to protect themselves from the weak yen or even the volatility of the Japanese yen.

And again to be fair, the Bank of Japan doesn't want to intervene in the Japanese economy too much as too much intervention might upset the normal market mechanisms. Sometimes too much intervention is worse than no intervention.

Have a nice day!

Japan Asia Ranking: Updated October 18, 2024.

Japan slips to 4th in Asia-Pacific power ranking: think tank

Article Source: https://mainichi.jp/english/articles/20241013/p2g/00m/0bu/026000c

Ideas:

It has been suggested that Japan was at its height in the late 1980's just before the asset bubble collapse and has not been able to recover since then. Some might even suggest, not a lost decade, but a lost three decades as its been that long since the Japanese economy really grew a lot.

Japan might be experiencing a record surge in foreign tourists, but beneath the surface is lot of challenges for Japan to try and solve within its economy.

Rankings really don't mean much, but for a country it might mean a lot as any country wants to be seen in a could light so a drop to 4th might, again, be much, for for some in Japan it might be something.

Japan, for the most part, only has itself to blame and for example, the immigration policy is not conducive to increased immigration of young skilled workers. Yes there are now 3.5 million foreigners living in Japan, but Japan has not really opened the door to widespread immigration that might improve in economy.

And again, the aging situation might again be Japans fault as it work-place policies are not beneficial to many working women who want to have children and the cost of living in raising children in Japan, like South Korea, has just become too much for young working couples.

But that's not to take away from India which moved up to third place as India as been moving up for a long time as it improves in economy and other factors.

Japan has lost a lot related to the competition, especially the three just mentioned as Japanese business and industry seems to be stuck and as not been a productive as it was in the 1980's when it was at its height. For example who really remembers Sony or Mitsubishi these days, but were giants in the 1980's. 

The Japanese technology sector has lost a lot to Taiwan and South Korea as TSMC and Samsung are now decades ahead of Sony and Mitsubishi or any other Japanese technology company.

The problem is until just recently, Japan didn't do much about it. But recently it has teamed-up with TSMC to build semiconductor plants in Japan to try and get back some of its lost market share.

The rise of China and of course North Korea has forced Japan to increase its defense spending and probably it will continue to increase its spending as its now very weary of what China is doing, especially related to Taiwan.

Japan and Taiwan are strategic partners but of course anything Japan does with Taiwan China will object to, to they keep it under-cover for most of its dealings with Taiwan.

Japan can't ignore its decrease in productivity, as many Japanese traditional companies are just behind, and for example fax machines are still used a lot in Japan, while very few if any advanced economies continue to use fax machines.

Numbers don't mean a lot but countries such as South Korea, might think they are important and anything Japan does and or Japan's ranking means a lot to them. For example, some might say that the only thing that matters is if we win more medals that Japan in the Olympics, or the more gold medals we win compared to Japan, is what's really important.

The Japanese economy has been stagnant for a very long time, and some even suggest up to 3 decades of stagnation, as some even suggest Japan grew too fast in the 70's and 80's as the reason for its stagnation now.

China might be seeing signs of Japanese style stagnation as its economy has been not so good recently and not growing like it did before.

And South Korea too, it is suggested is beginning to see signs of the same demise that has hampered Japan for a long time is now beginning to creep into the South Korean economy.

Have a nice day!

Japan Bankruptcies due to labor shortages: Updated October 24, 2024.

Record 163 firms went bankrupt in Japan in April-Sept. due to staff shortages

Article Source: https://mainichi.jp/english/articles/20241007/p2a/00m/0bu/022000c

Ideas:

The hiring landscape in Japan maybe has changed significantly, and maybe some workers are unwilling to take jobs that many would have years ago.

The so-called labor shortage in Japan is real and probably is not going to change anytime soon unless Japan can find a way to increase favorable immigration policies which can provide good jobs for foreigners and not just the low-wage trainee jobs being offered.

For Japanese workers, they see and know many companies are giving wage increases, not only to workers at the company, but also newly hired workers with substantial wages to attract the best talent they can get.

Small and medium size companies that can't afford to pay the wage increases that large companies can afford are losing out.

And as the article suggests sectors such as the construction industry might actually want to pay the higher wages, but these days, many young workers don't want to work in the construction industry.

The logistics industry companies might be suffering because of the need for long work hours, as again, young workers don't want to work the long hours, that maybe their fathers did some time ago.

Sometimes good intentions by a government can make it difficult for some sectors as the case with truck drivers and overtime restrictions. Maybe the answer is less restrictions for some industries which are having labor shortage problems.

Small businesses of course feel the full effects of the labor shortage as they don't have the resources needed to hire more workers or pay good enough wages to attract any new workers.

The Japanese government, for example, should put into place immigration policies which can help small and midsize companies hire foreign workers to help them stay in business, and maybe allow them to offer a little lower wage than the minimum wage as needed.

What the new Prime Minister says is good but it doesn't solve the situation for small companies that can't afford hefty wage increases.

Again, the Japanese government, if needed, if Japanese workers are not going to work for small companies, they need to have some good immigration policies that can bring in the type of workers needed for the small Japanese companies.

Wage increases are good and needed, but the reality is, many small and midsize companies can't afford to match the wage increases of large Japanese companies and that is the main problem, as young workers know this, so they don't want to work for a small company that when they can get a job at a large Japanese company with better wages.

What the article suggests is good, but some companies can't afford to wait to prove they can earn good profits and sales from their core business. The waiting time might be too much and they will then be in a position to possibly go bankrupt.

Yes, large companies, for the most part, are not the problem, its the small and midsize companies that can't afford wage hikes or even afford to hire new workers, or even give their existing workers a good wage increase.

Unless the Japanese government changes some of its labor or immigration policies, not much is going to change, as Japan needs foreign workers to come in and work in the small and midsize companies and then the small and midsize companies can get back to business as usual.

Have a nice day!

Japan Real Wages: Updated October 17, 2024

Japan real wages log 1st fall in 3 months amid continued price rise

Article Source: https://mainichi.jp/english/articles/20241008/p2g/00m/0bu/004000c

Ideas:

Wages increases in Japan are good and very much needed, but a 5% increase in wages is one time situation, usually in April, but inflation is not a one time situation as it can increase anytime as it as in Japan a lot since the pandemic.

Japanese households saw marked increase in June, but after June reality set in with more inflation after that which might have made the wage increase moot meaning the higher purchasing power only lasted a few months.

A 0.6 percent drop in real wages is really not that much, but for some it might a challenge to keep their heads above water as inflation continue to increase, but yes, at a slower rate.

Unfortunately, globally, just before elections politicians always make a lot of noise about what they are going to do, but in reality, some or many always do something different, as the situation in office is always different than what they can really do.

Consumer spending in Japan is never where is should be, as Japanese consumers just don't spend like US or even EU consumers, as they are more savers. In itself that's not a good or bad thing  but different cultures do different things, as the average Japanese consumers just doesn't go on big spending sprees like maybe in the US.

There is a definite labor shortage in Japan now, as there was recent article about some/many companies going bankrupt because they couldn't find the workers they needed because they were unable to meet the new demands of workers who want higher wages.

Price increases might be slowing, but are they slowing enough so that the average Japanese consumer can feel anything good from the recent wage increases.

Nominal wages are just wages including inflation, so they really don't mean much for the average consumer.

Subsidies are good but they shouldn't be depended on for a long time as they are meant to be a short-term help, but the market, if all possible. should be able to control inflation, which it hasn't in Japan for a long time.

The average wages of 3.0 was good, but the problem is inflation continues to increase every month, for example 3.5 in August and 3.2 in July etc. 

So even though Japanese workers see an increase in wages, usually just once in April, inflation continues to increase every month. Bonuses are good but they don't happen every month usually just twice a year in Japan.

So, again,  a wage increase of 3.0 is good, but inflation increased 3.5 and 3.2 respectively, and that just the months shown here, as we most likely it was the same or similar in other other months too.

Nominal wages really don't mean much as its real wages that are important. Nominal wages are wages not adjusted to inflation, so inflation might be part of the nominal wage.

Household spending or consumer spending is never where is should be in Japan. And as inflation continues to grip the Japanese economy, consumers in Japan, as anywhere, continue to cutback on their spending.

Of course maybe the hot summer months might have had something to do with the decrease in spending as maybe consumers didn't go out as much, as or they went to the malls to get out of the heat, but still didn't spend that much.

The typhoon situation in Japan is always going to reduce some economic activity, and this season was no different. And then add in the earthquake advisory and that made people even more cautious about what do to. 

Household spending supposedly makes up about 50 percent of Japan's GDP, but in reality, Japanese consumers don't seem to be spending that much since the pandemic as inflation seems to have curbed spending, and not even after the pandemic or even before the pandemic Japanese consumers haven't been spending like they do in the US or in the EU.

Japanese households have always been more savers than spenders as saving is a big part to the Japanese culture, but for Japan to get out of its current stagnation, there needs to be a better balance and not just all savings but some spending too in the Japanese economy.

Have a nice day!

Japan Current Account Increase: Update October 15, 2024

Japan logs record current account surplus of 3.80 tril. yen in Aug.

Article Source: https://mainichi.jp/english/articles/20241008/p2g/00m/0bu/005000c

Ideas:

The weak Japanese yen is a positive for some activities in Japan such as foreign investments and exports, but its also a negative for the Japanese domestic economy, which is a resource-poor economy, which means it has to import much of what is needs.

The current account is like a country's bank account and foreign investments and exports increase the current account while imports reduce the current account.

The Bank of Japan might not be in a hurry to increase the weak yen and its just too good for many now, and also foreign tourists who have more purchasing power buying things in Japan.

Of course as always there are some positives and some negatives too such as sometimes imports exceed exports such as when pharmaceuticals and oil increases a lot.

Japan can't rely on exports only as there are always going to be periods of less than expected demand and maybe demand for imports with some products increases a lot.

But the fact that the current account has expanded for 19 straight months is a good thing, as the current account helps pay for many things in the Japanese economy.

The travel surplus is very important for the Japanese economy, as Japan is relying heavily on foreign tourists and their spending to lift Japan out of the still pandemic hole that was created during the pandemic, as many services business went bankrupt and many still have not fully recovered.

At the same time the Japanese economy has been in a stagnant situation for a very long time, and foreign tourists help the domestic economy recover, but of course it can't completely change the Japanese economy as other factors need to improve too.

The weak yen might be a negative for Japanese travelers as they have to experience a stronger yen overseas which means they have less to spend compared to foreign travelers who travel to Japan who have the advantage of being able to spend more.

So the Bank of Japan has to balance out the weak yen for exports and foreign investments but at the same time try to find a way to help the domestic economy and imports as again, Japan is a resource-poor country and needs to import much of what it needs and of course is subject to the weak yen and higher import prices.

Have a nice day!