Wage Developments in Japan: Four Key Issues for the Post-COVID-19 Wage Growth

Ichiro Fukunaga, Kakuho Furukawa, Shunsuke Haba, Yoshihiko Hogen, Yosuke Kido, Tomohiro Okubo, Kotaro Suita and Kosuke Takatomi
Additional contact information
Kakuho Furukawa: Bank of Japan
Shunsuke Haba: Bank of Japan
Yoshihiko Hogen: Bank of Japan
Tomohiro Okubo: Bank of Japan
Kotaro Suita: Bank of Japan
Kosuke Takatomi: Bank of Japan

No 23-E-4, Bank of Japan Working Paper Series from Bank of Japan

Abstract: This paper examines various factors that have dampened nominal wage growth in Japan, comparing them with those in the U.S. and Europe, and shows that some of these factors have been changing since around the COVID-19 outbreak. Specifically, we point to the tightening of the labor market conditions partly reflecting demographic trends, the plateauing trend of the part-time worker ratio, signs that the job-to-job transition is becoming more active as wages rise, and an increased consideration of inflation for labor-management wage negotiations. Key issues on the outlook for the pace and durability of nominal wage growth in Japan are (A) whether wages will rise more broadly, including among full-time workers with relatively low mobility, (B) whether firms' growth expectations will increase, boosting investment and leading to higher labor productivity, (C) whether labor mobility will be facilitated by skill upgrading, and (D) whether the situation in which wage increases have been suppressed under the low inflation norm will change so that prices and nominal wages will rise together.

Keywords: Business Wages; Labor market; Prices (search for similar items in EconPapers)
JEL-codes: J20 J30 (search for similar items in EconPapers)
Date: 2023-03-16
New Economics Papers: this item is included in nep-lma
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Citations: View citations in EconPapers (2)

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