According to official data, earnings increased at their quickest rate in 28 years—1.8%—in May as compared to a year earlier. Despite the increase, after accounting for inflation, people‘s real purchasing power continued to decline.
The third-largest economy in the world, Japan, has seen its inflation rate increase for more than a year.
Living Expenses
Prices have increased recently due to the easing of pandemic restrictions and the increased cost of essential commodities like wheat and oil brought on by the conflict in Ukraine. The rising cost of basic goods was also a result of Japan’s declining yen.
According to the most recent official estimate of Japan’s inflation rate, core consumer prices increased 3.2% from a year earlier in May. Many people’s earnings in Japan scarcely changed for decades due to the country’s nearly nonexistent inflation rate.
- Earnings rise 1.8% in May, but real purchasing power declined.
- Pandemic restrictions ease, Ukraine conflict, rising prices impact basic goods.
- Japan’s labor pool declines shifts, and Fast Retailing raises wages to compensate employees.
Fumio Kishida, the country’s prime minister, asked employers to act in March as the cost of living kept rising. The automotive industry behemoths Toyota and Honda, as well as Fast Retailing, the owner of the Uniqlo clothing brand, announced this year that they would be raising employee wages.
This week, firms agreed to the greatest wage increases in three decades at annual labor discussions, according to a statement by Japan’s largest trade union, Rengo. The salary increases signify a “symbolic structural change in the Japanese economy,” according to research experts at the Japanese investment firm Nomura.
Around the end of 2021, they said, “Japan’s labor pool’s rapid decline shifted.” The earnings should continue to rise as a result of this. Fast Retailing, the company that owns Uniqlo, announced earlier this year that it will be raising wages to “compensate every employee fairly for their ambition and talents.”
The business continued by stating its goal to “increase the company’s growth potential and competitiveness in line with global standards.” Koji Sato, the CEO of Toyota, expressed his optimism that the decision will benefit the whole Japanese automotive sector and “lead to frank discussions between labor and management at each company.”
Honda, a rival automaker, claimed that because starting salaries are being increased, the extra funds will primarily go to younger workers.
