Recent news that the labor market is now the tightest in 43 years — surpassing the peak during the bubble boom from the late 1980s to the early 1990s — underscore the mystifying situation where improving employment conditions do not lead to wage increases or recovery in consumer spending. More policy efforts need to be explored so that the better job prospects will push up workers' income and dispel their lingering hesitancy to spend.
According to the Health, Labor and Welfare Ministry, the ratio of job openings to job seekers in April hit a nationwide average of 1.48 — topping the bubble-period peak of 1.46 and the highest since 1.53 recorded in February 1974, right after the rapid postwar economic growth came to a halt. The number of new job openings rose a robust 3.2 percent from a year earlier. There were 2.07 job openings to every job seeker in Tokyo, where the labor demand was the tightest among the 47 prefectures, and 1.09 in Hokkaido, where the ratio was the lowest. The jobless rate remained at a 22-year low of 2.8 percent.
Despite the tight labor market, driven by a steady increase in demand in transport, manufacturing, construction and other sectors, wage growth remains stagnant and personal consumption weak. Government data released on the same day showed that per-household consumer spending declined year-on-year for the 14 monthly fall in a row — the longest consecutive decline since the period between March 2008 and April 2009. Employed workers' wages in April were flat from a year ago on an inflation-adjusted basis. Workers' wages had only the first year-on-year net gains in six years in 2016. The wage picture is in sharp contrast with the years during the asset-inflated bubble boom, when people's wages grew by roughly 4 percent a year.