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Finally an in Increase for Wages in Japan

After two years of falling wages, Japan saw a 0.1 percent increase in February.  Despite this positive, overall pay declined 0.2, the first drop in three months.  However, the increase in wages comes as a relief to Prime Minister Abe whose economic strategy (Abenomics) to revitalize Japan’s economy relies heavily on higher wages.

Japanese companies have been wary of salary increases, preferring to increase bonuses instead (a large part of the income for Japanese workers) rather than committing to a permanent raise.  Particularly in light of the declining population and therefore a shrinking customer base, commitment to paying their workers higher wages is a difficult sell to employers.  This hesitance from Japanese firms is a big hindrance to the success of the Abenomics strategies.

Prime Minister Abe’s plans to revive the Japanese economy is two-fold; in addition to an increase in wages by Japanese firms, inflation is encouraged to balance out the massive deflation the Japanese yen has experienced.  It’s a risky plan, because if one half succeeds without the other, people are much worse off (inflation increases, but wages don’t = bad news for everyone).  The weak yen has made imports relatively more expensive, aiding inflation, but wages have not kept up.

A criticism of Abenomics is that it is a strategy to slow the decline of Japan’s economy, but not a long-term minded plan for the success of the Japanese economy.  The Prime Minister combats this, that the young people of Japan must regain confidence in the economy now in order retain aspirations and optimism for the future.

Japan, Land of the Falling Wage



  1. gjeong gjeong

    Again, I am not sure how Abenomics will work out even in the long term. It has not affected the wages and deflation problems that much. Many economists now criticize the plan. I strongly believe that Abe needs to change his plans.

  2. kuveke kuveke

    By focusing on inflation and keeping the yen weak prices in Japan are high. High prices mean that companies experience more costs and pass some of those costs on to the workers with lower wages. Energy prices in Japan are very high partly because their are no domestic energy providers. Inflation will mean that a weaker yen will buy less energy which makes everything in an economy more expensive. Wages may go up as the labor force shrinks meaning that the demand for labor will go up.

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