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Japan’s real wages record largest drop in eight years

Japan's real wages plummeted the most in eight years in fiscal 2022, as rising living costs outpaced nominal wage growth, presenting a challenge for Prime Minister Fumio Kishida's government to invigorate the third-largest global economy. While nominal wages increased by 1.9% in the last fiscal year, marking the fastest growth in 31 years, inflation at 3.8% exceeded these gains, leading to a 1.8% drop in real wages. This signifies the need for wages to rise further to beat inflation and enhance consumer purchasing power. Japanese firms, recognizing the importance of improving pay to retain skilled workers amid labour shortage, have agreed to a nearly 4% wage hike this year, the quickest increase in three decades.


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