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Japan’s Coming “Wage Surprise”

Posted on January 9th, 2014 at 16:08 by Sueyourdeveloper in category: News -- Write a comment


The year 2013 saw the Japanese economy turn the corner on two decades of stagnation. And the future will become even brighter with the appearance of what we are calling the “wage surprise.”

Intensive discussions since September among Japanese government, business, and labor leaders have been geared toward setting in motion an upward, virtuous cycle whereby increased wages lead to more robust growth…

The wage surprise draws its inspiration from the Netherlands, where a consensus emerged in the early 1980’s that in order to sustain employment, the burden of taming rampant inflation should be shared by employers and the employed. That consensus was enshrined in the 1982 “Wassenaar Agreement,” named after The Hague suburb where it was forged.

Japan is now witnessing the emergence of a similar national consensus, or, rather, the Dutch consensus in reverse: a shared sense that the government, major industries, and organized labor should work together to increase wages and bonuses (while facilitating incentives that could enhance productivity).

Interesting. They’ve tried everything else, so they now want to try increasing people’s pay so they can buy stuff. How about reducing inequality as well, or is that too difficult?

  1. My impression is that inequality is relatively low in Japan. At least the last time I saw the list of multiples of CEO pay vs median employee pay, it was said to be lower in Japan than in any other developed country.

  2. Agreed. Although things have been going the wrong way:

    “…Japan is still one of the healthiest and most egalitarian nations in the world, and social inequalities within the population are less expressed. However, the magnitude of the social stratification has started to increase, and this is an alarming sign.”

    And Abe has a point; bringing wages up is necessary.

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