Japan Inc finally giving raises, just not to everyone

Yet the small companies that provide most of Japan's jobs generally can't increase pay, business owners, economists and officials say. Battered by the pandemic, small firms now struggle to pass on higher costs out of fear of losing customers.

And it's the big corporations that put pressure on these smaller firms to keep their prices low, so they can make more money.

And all the headlines will be about the raises that these companies give their employees and nothing said about literally about half the entire workforce getting nothing.

Many won't remember it but after all the self-congratulatory hubris of the bubble economy this all seems rather sobering.

Real wages, which take into account inflation, have had their biggest hit in eight years.

Wait....REAL wages should also have increased taxes taken into account as well! Also, nearly a generation of wage stagnation too!

Real wages have been steadily going DOWN for just as long as well!

As Yubaru states the big companies raise their prices, then pressure these small Mom and Pop shops to keep things bare to the bone so they can reap a higher profit. Toyota, don't be such cheap bastards and pay a decent price to all of your sub contractors! You are destroying the country by only enriching yourself!

we'd be out of business in two years

Then do us a favor and go out of business. Many of these firms exist because they are family/legacy endeavors and can only be competitive by underpaying their young or foreign workers. The system puts a drag on the economy by suppressing wages thus consumption, and thus ultimately economic growth.

there's no way Hideki Kawada can afford raises for the 18 employees at his printing firm.

So restructure to 10 employees and pay them better.

My brother in law is one among many of them, leading a small company with no future.

Reaps all profit for himself (not just a few man, but millions and millions per year !), never gave salary increase and says can't raise prices.

No employee to go on strike.

Boss paradise.

Then do us a favor and go out of business. 

Here is an article from the financial times about this very topic!

https://www.ft.com/content/994ef667-84da-4ccc-8921-b8db81576751

If the government is serious about kickstarting the deflationary economy, then they should abolish the consumption tax. That would help not just those working for big corporations but a vast majority of Japanese people who work in small businesses.

The photo of the silver-haired worker in Higashiosaka above says it all. The mom and pop factories cannot possibly compete with countries that have invested in modern manufacturing and have abundant cheap labor.

Battered by the pandemic, small firms now struggle to pass on higher costs out of fear of losing customers.

Lots of excuses here for businesses. Kishidas has announced multiple times subsidies to businesses as part of his anti inflation New Capitalism. Unlike suffering workers getting zero. Business has gotten fat and lazy from corporate socialism and forgotten this old wisdom from a time of broader prosperity.

It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.

-Franklin Delano Roosevelt

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Japan is pretty much doomed let's be honest.

LDP regime benefit only large corporations who can expensive donate to LDP.

On the other hand, poverty or inequality are expanding at Japanese society, incompetent politics caused hundreds Covid19 deaths everyday.

incompetent politics caused hundreds Covid19 deaths everyday.

Wow, blaming the government for people getting sick from COVID. Let me guess, you blame them too for the cold weather as well!

While people on this site rely on wages as most are expats, how many Japanese are reliant on wages? I bet no more than 20%, as most have large family assets to draw upon. I fail to observe people having financial issues almost everywhere i go and it is commonplace for people to drop 10K+ yen per person on a night out.

It is not uncommon for SME owners to make several hundred million yen a year, so to say they are struggling I think is a rare occurrence.

""The lack of broad wage growth illustrates Japan's struggle to escape a deflationary spiral that has forced households and businesses to scrimp instead of spend.""

""deflationary spiral ""

Japan was and still is overly inflated in many sectors when compared to similar economies, for years consumers were ripped off and tricked into buying goods that were so overpriced it makes you think it must be really special, but yet it was imported from China, Korea, Taiwan, etc. and sold at a super inflated price, it's called "GREED"

NOW consumers got the internet and have access to the world, they can't be scammed anymore!! all they need to do is google and compare prices and order, the world is their oyster.

No salary raise at my company since 2017.

Covid is the main culprit. There may now be a second deluge from China. But Japan's lifelong employment system is problematic too. It protects inferior employees and pass on the real costs of that to more capable employees, who also see that there is no point in creative work. If you have fake job security for so many people for so long, and now it is pay-back time, you get a crisis. No free lunch, as they say in ECON 101.

People just really need to start pushing to become more international to force Japanese companies to get closer to international standards. I sometimes go to a shared office and even though many of the people there work freelance they never try to get work beyond the borders of Japan, I sit next to them making 4x what they make doing similar work, and even though they know that, they somehow don't even play with the thought of changing. Many are stuck within a very thick bubble.

Some companies just need to fail.

Many of these small companies do not innovate or invest in opportunities for growth, they just keep doing the same thing thinking business today means business tomorrow. The other problem is they can’t sell well. The buyer is there so they don’t make an effort to capture new customers which introduces a buyer controlled business and allows the buyer to set prices.

This is why big corporations squeeze profitability out of small companies to add to their every growing pile to bolster market cap which eventually destroys the middle and just below middle class. All those suppliers to Nissan know their future was absorbed into the pocket of Carlos, no human is worthy of that much salary.

Yet, I’ll say this for Japan, its CEO and Board pay isn’t as out of control as the rest of the world.

Cutting colleagues sucks but I’d rather innovate and cost cut to pay 7 people a living wage than 10 a poor wage.

Worst case, they can always sell their business on BATONZ.

Close friends run a family business with about 60 employees spread across 3 cities.

In the hi-tech printing on demand world with customers being educational institutions, sporting groups as well as online and off the street customers.

Contrary to some posts the pandemic gutted their business and they hung on by a thread for 2 years. When the olympics crashed so did $millions of prospective earnings. Some workers were laid off, but many now have been taken on again.

This company looks after it's workers even paying bonuses to casual staff.

They have survived by ingenuity, business skills, painful decisions, an understanding workforce and some luck.

Those who suggest that the pandemic some how had little effect on esp smaller businesses don't know the reality for many.

I sometimes go to a shared office and even though many of the people there work freelance they never try to get work beyond the borders of Japan, I sit next to them making 4x what they make doing similar work

Because they dont need to as they do not need the money, so why put in the effort? If you go out with them on a night out you will see that Japanese making 3-5M salaries can easily outspend an expat worker making 20-30M salaries. That is because they have large family wealth to draw upon and are not at all reliant on wages. If you make a 20-30M salary in Japan and relies on that salary, when you go out you feel like middle-lower class because literally everyone is willing to outspend you.

This photo just sums up so much about Japan. A man working well past retirement age, in a crappy factory, for probably 250,000 yen per month before taxes and other deductions.

@daikaka

What’re you talking about?

The average salaryman just cannot afford to go out whilst the average expat most certainly can.

And the expat gets accommodation, school fees, a car (usually) longer vacations etc

The comparison is futile

Just on Uniqlo but their stores introduced self checkouts a couple of years ago. So they will have fewer staff to get this pay rise.

And the expat gets accommodation, school fees, a car (usually) longer vacations etc

Sorry, I an talking about expats who are living long term in Japan and are hired in Japan for senior director and executive roles at salaries of 20-30M. No benefits other than salary. In that case the lifestyle is certainly worse than the average salaryman whom I can observe.

The salaryman I’ve been seeing at least are easily willing to outspend their bosses on any given night out, often 50,000 yen to them is nothing, while being quiet painful to people relying on a 20-30M salary. I simply do not see many people relying on salary in Japan as their spending levels far exceeds what’s reasonable based on their salaries.

Good news! Salaries going up!

But not for everyone?

That's Bad News !

@daikaka

It's true that there are a lot of people like that in Japan since they see it as their duty to leave behind money for their family. In Sweden where I am from parents would just have as much fun with what ever they have, if they had anything saved up to begin with. But yeah this is absolutely not the norm, especially now days, I think you might encounter people like this more often if you go to expensive places in the city center, normal everyday salarymen hang around the small bars close to their home. As for the share office people, they talk about wanting to make more money all the time, but looking outside the borders of Japan seems to be unthinkable.

Echoing what another said, if your business model can’t sustain its current workforce with realistic pay expectations, then your business not just deserves to fail, but it needs too. Clearly your not fit to be running it.

Too many businesses are allowed to zombie mode for decades when the employees and or land would be better served elsewhere.

Not to mention hiring practices being pointlessly outdated here. “We have to hire x amount of fresh out of university people each year” why? “Because that’s how it is” “we can’t hire people over 35 for mid career hires” why? They are experienced and still spry to learn, it’s a win win. “Well that’s just how it is”

looking at job requirements in this country makes me wonder how any of these places are in business

While people on this site rely on wages as most are expats, how many Japanese are reliant on wages? I bet no more than 20%, as most have large family assets to draw upon. I fail to observe people having financial issues almost everywhere i go and it is commonplace for people to drop 10K+ yen per person on a night out.

If there were many people in Japan who had the ability to drop 10k+ yen every night out because they had large family assets to draw upon on, I don't think we'd be having this conversation of companies being hesitant to raise prices. Companies would take advantage of this and continue to raise their prices until they have nothing left to milk. Also, don't forget that Japan is likely one of the last countries you want to be in when inheriting money because of the pain in the ars paper work and high taxes.

Sounds like the U.S.

Years of stimulus? Maybe for those few who can now afford those raises.

@daikaka

if the average salaryman had so much asset s why would the economy been in stagnation and deflation for so long.

you are talking about 10% of the salarymen.

As the local executive earning 20 to 30 m and not able to spend 50000 on one night from time to time it means he has serious problem with money management (eg paying a monthly rent of 800,000).

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“So restructure to 10 employees and pay them better.”

Restructuring is a bad idea in a shrinking economy. People who’ve lost their jobs won’t spend much money and that would dampen consumption.

Most Japanese are now members of the precariat. The country is getting poorer by the day and society is starting to break down. Japan Today seems reluctant to report on the gangs that are robbing (and killing) old people for a pittance in the suburbs. How desperately poor do you have to be to do that? I never thought Japan would get this bad -- it's really shocking.

Most Japanese are now members of the precariat. The country is getting poorer by the day and society is starting to break down. Japan Today seems reluctant to report on the gangs that are robbing (and killing) old people for a pittance in the suburbs. How desperately poor do you have to be to do that? I never thought Japan would get this bad -- it's really shocking.

They don't even report on much negative news that I regularly see on Yahoo News. Japan Today only shows a balanced perspective to its foreign audiences like it is being moderated by MoFA. Yahoo News knows that the country is going downhill every day, and Japanese commentators curse LDP elites and other elites daily over there.

That's interesting, Septim. I have noticed that any criticism of the system as a whole will end up with a burst of downvotes but with no arguments in favour. It's very strange and suspicious. It's like a generally positive image must be promoted with a bit of teeth-sucking on the margins.