The chances of an increase in salaries in Japan commensurate with the national commodity prices in 2023 appear remote, which would be disappointing for an economy that has not had a significant real wage growth in more than 20 years.
Japan, the third-largest market in the world, could expand at a far slower rate than previously anticipated this second quarter, August 2022 as Tokyo braces for the effects of a downturn in the US, China, and Europe.
The likelihood of nominal wage growth lagging price rise would heighten the danger of households becoming more frugal, which would affect the economy further.
According to OECD data, average earnings in Japan barely increased since the early 1990s and were the lowest among Group of Seven (G7) economies in 2021.
Contrary to indications, wages are increasing as a rapidly aging population worsens labor shortage, and labor unions could demand higher pay hikes in 2023. Japan Labour Cost Index grew between 2018 and 2022 at 5.15% in absolute terms and at a CAGR of 1.5%, according to GlobalData.
In Japan, it seemed unlikely that nominal salaries would increase faster than overall inflation over the next 12 months. It is doubtful that nominal wages will grow faster than inflation during this time.
Owing to the increase in the prices of gasoline and raw materials globally, the national inflation rate reached a nearly eight-year high of 2.6% in July 2022 and has been above 2% for four months in a row through July 2022, according to the Statistics Bureau of Japan.
Don’t wait - discover a universe of connected data & insights with your next search. Browse over 28M data points across 22 industries.
Access more premium companies when you subscribe to Explorer