Thanks for the detailed explanation. Being on the ground managing and hiring in Japan, the recent headlines really didn’t make sense with what I was seeing/hearing. You cleared that up for me! It would be interesting to see this data from a global organization v domestic organization perspective. I see a trend of global orgs increasing base pay for the 新卒 level hires to get the best candidates. I wonder how this would impact the long term nominal wages in JP...
Foreign firms are such a small part of the employment picture, except in a few occupations, that I don't see them having a big impact. But there might be exceptions, e.g. IT. See my piece on a related topic. https://richardkatz.substack.com/p/metis-2025-digital-cliff-part-iii
Great article, I second the comment about analytical journalism below.
Looking back through the data, the only times in the last decade or so when real disposable income has risen have been the times when there is actual deflation. Japan inc. seems to find it hard to raise wages, but it seems to find it hard to actually cut them too, so real incomes only seem to rise when there's deflation. Deflation actually looks like a pretty good deal for the Japanese consumer. Is there an argument for saying that more deflation would have helped transfer wealth from Japanese companies to consumers?
It's a complicated issue--with conflicting impacts that needed to be netted out. However, given the tiny level of deflation in Japan, I don't think it made much of a difference one way or the other.
Superb article which really speaks to (i) the paucity of analytical journalism we have today from most outlets; and (ii) the Japanese government's ability to generate maximum PR with minimal actual change. The devil really is in the detail...
Thank you for another logical explanation that is easy to comprehend. The proverbial devil is in the details, but it seems like the general media fell victim to group think by neglecting to note statistics on an hourly basis. As the size of Japan's working population shrinks, it will be interesting to chart how the same statistics trend.
Thanks for the detailed explanation. Being on the ground managing and hiring in Japan, the recent headlines really didn’t make sense with what I was seeing/hearing. You cleared that up for me! It would be interesting to see this data from a global organization v domestic organization perspective. I see a trend of global orgs increasing base pay for the 新卒 level hires to get the best candidates. I wonder how this would impact the long term nominal wages in JP...
Foreign firms are such a small part of the employment picture, except in a few occupations, that I don't see them having a big impact. But there might be exceptions, e.g. IT. See my piece on a related topic. https://richardkatz.substack.com/p/metis-2025-digital-cliff-part-iii
Quite sad that real wages are falling despite productivity actually having risen alongside other Western nations (see https://www.thejapanologist.com/blog/the-myth-about-japans-lacking-productivity-growth?format=amp)
Great article, I second the comment about analytical journalism below.
Looking back through the data, the only times in the last decade or so when real disposable income has risen have been the times when there is actual deflation. Japan inc. seems to find it hard to raise wages, but it seems to find it hard to actually cut them too, so real incomes only seem to rise when there's deflation. Deflation actually looks like a pretty good deal for the Japanese consumer. Is there an argument for saying that more deflation would have helped transfer wealth from Japanese companies to consumers?
It's a complicated issue--with conflicting impacts that needed to be netted out. However, given the tiny level of deflation in Japan, I don't think it made much of a difference one way or the other.
Superb article which really speaks to (i) the paucity of analytical journalism we have today from most outlets; and (ii) the Japanese government's ability to generate maximum PR with minimal actual change. The devil really is in the detail...
Thank you for another logical explanation that is easy to comprehend. The proverbial devil is in the details, but it seems like the general media fell victim to group think by neglecting to note statistics on an hourly basis. As the size of Japan's working population shrinks, it will be interesting to chart how the same statistics trend.