BOJ blames Japan's unique labor practice for low wages, inflation

There are several factors at work here. First is the seniority-based promotion system in Japanese companies. Excellent workers cannot promoted more quickly than poor workers, and poor workers cannot be promoted more slowly than excellent workers. In addition to this, full-time workers in Japan are protected by the law, and cannot be easily fired. If a worker is not rewarded for excellent work, he will not do excellent work, if a worker can be promoted while doing poor work, he will do poor work. If a worker cannot be fired for doing no work, he will likely do no work. It sounds silly, but Mizuho bank has what is called a "rubber room" where workers who can't or won't work spend their days. The cost and complications of firing them are so high that Mizuho simply lets them spend their days doing nothing, and paying them to do it.

The drawbacks to these things are that companies are necessarily reluctant to hire full-time workers. And the staff at Japanese companies do not perform highly, meaning that they generate less value for the company than they otherwise would. When workers don't perform, companies don't perform, and when companies don't perform, they can't afford to pay very much to their workers.

Both Japanese companies and the Japanese government share the fault for this problem.

"BOJ blames Japan's unique labor practice for low wages, inflation"

Instead of casting blame how about taking some responsibility and offering some possible solutions. if you're not part of the solution you're part of the problem, springs to mind.

Sangetsu03 makes some very valid points, its pretty obvious at this point that Japanese work culture needs to change in order to keep up with modern work standards in a global market, it seems that a lot of cultural expectations at the workplace and in society in general have not kept pace.

Most of the younger generation seem to be more adaptable and open to change than their older counter parts and often get held back by old fashioned views in regards to promotion and efficiency. I would also say that Japanese unions should shoulder some of the blame for becoming so complacent in standing up for workers rights and wages, from my experiance it seems that only unions external to companies with a more diverse membership actually stand up for individual employees or fight for better conditions.

The old hat need to accept the reality that what used to work doesn't work anymore, also at least the BOJ Japan is actually criticising something, far too often in Japan people see issues and want to say something but don't for fear or being isolated from the group.

Instead of casting blame how about taking some responsibility and offering some possible solutions. if you're not part of the solution you're part of the problem, springs to mind.

Isn't the BOJ saying that the problem is there are too many temp jobs on offer and not enough regular full-time? They are directly contradicting Abenomics! This is actually refreshing to see them make an opposing statement.

Companies are taking various steps to address a shortage of labor

They do "everything", but none that actually make people's lives better. Still no work-life balance, still no offsite work for workers with high initiative, still no fraternity/maternity support. "We want obedient slaves, not making people's lives better" is pretty much the attitude here. Monetary policy can only do so much, economy depends very much on people's outlook of the future, no outlook, no inflation.

Companies are taking various steps to address a shortage of labor.

As a matter of fact I agree. They are doing many things.

1 - Hiring subcontractors, and the subcontractors hire subcontractors that hire subcontractors, and so on, each one paying less than the one before.

2 - Inserting machinery and destroying jobs. Since a subservient robot who can work 24/7 is way better than a lousy human who can do **only** 18/6.

3 - They are trying to create an ambient where the full-time worker has motivation to do his job and enough time and money improve himself, as for the temp they really are trying to adapt the environment so the temp-worker has the respect and equality of treatment LEAST as a person, when compared to the full-time worker. Oh no! It seems that this one is not a good idea at all, too much headache, they don't plan on doing it and probably never will.

What's with the "struggle to attract employees" line which never stops being repeated?

Is Japan struggling to attract slaves to do work they feel is beneath them - are those the type of "jobs" they are referring to?

There are plenty of Japanese companies in different sectors who need qualified applicants with experience and yet they will still use J-language as the reason to decline someone, even when they have an international division/unit/etc set-up within the company and are heavily using English in said division/unit.

I think Japanese just like to complain about not being able to fill roles when it's their own fault often enough.

 "...how about taking some responsibility and offering some possible solutions."

Over 15 years of the most aggressive monetary easing the world has seen in modern times IS an attempt at a solution. However, a central bank has a limited role by law. If the private sector refuses to play along, there's not much the BOJ, or the government, for that matter, can do.

The core problem is that the reforms of recent years encourage companies to hoard their profits and so they pay their workers as little as possible as a way of "enhancing returns to shareholders."

Reforms = race to the bottom

Isn't the BOJ saying that the problem is there are too many temp jobs on offer and not enough regular full-time?

No they seem to be saying that regular full-time workers don't respond to offers for higher pay as workers do overseas:

permanent workers' pay remains stagnant because labor unions representing these employees, who enjoy better benefits than those on the temporary roll, tend to prioritize job security over higher pay, it said

It's not just their labour unions but the workers themselves. But this is nothing new. This feature of Japanese workers is frequently pointed out here even in the JT comments, by myself for one.

You'd have hoped that the policy makers would take such realities into consideration prior to policy making, rather than making policy first based on some economic playbook and then blaming policy failure on the obvious later.

If the private sector refuses to play along, there's not much the BOJ, or the government, for that matter, can do.

There is plenty that the government could do. They need only improve the incentives for the private sector to change its behaviour and it will. Incentives matter. Printing money doesn't matter much at all, when there is no shortage of money to begin with.