Japan: Annual wage growth depressed by estimated 0.1ppt – Nomura

According to Yoshiyuki Suimon, Research Analyst at Nomura, the trend of Japan's increasingly severe labor shortages is confirmed by nationwide data on labor market supply-demand such as the unemployment rate and job openings-to-applicants ratio.

Key Quotes

“Data on the number of people employed in each industry in Japan as a whole over the past 10 years (2007–17) show a sharp increase in the number employed in health & welfare.”

“The increase in the number employed in urban areas has been particularly marked, with growth in the number employed in health & welfare in the three major urban areas combined totaling 1.3mn over the past 10 years (an average of 130,000 a year).”

“Wages in the health & welfare sector, which continues to attract labor inflows, are relatively low.”

“According to our estimates, these inflows depress wage growth by about 0.1ppt a year. As Japanese society is still aging, the demand for health & welfare services is likely to continue to increase steadily.”