More food for thought on Japanese wages

November 22, 2007
By Ken Worsley

Morgan Stanley’s Takehiro Sato and Takeshi Yamaguchi published a must read for those interested in wages in Japan over at the Global Economic Forum. A sample:

[T]he primary characteristic of the current economic expansion has been the lack of macro wage upside despite improved employment, mainly due to issues at small businesses. Monthly Labor Survey data indicate that wages have not dropped much at businesses with 30 or more employees but are clearly lower for businesses with less than 30 employees. We think that wage softness at small businesses is a factor hurting consumption activity. Yet there is no obvious solution at this point, considering the direct adverse impact of the upswing in resources and energy prices on these small businesses.

They also expect core CPI to be on the rise from November, though this rise seems primarily tied to higher oil prices. Will this mean even lower scores in the Economy Watchers’ Survey and for the Consumer Confidence Index come year-end?

Filed Under Economics, Labor and Wages