Japan's labor market may be at an inflection point as the nation braces for a shortfall of millions of workers, the rise of generative AI and risks to economic security.
The spotlight is increasingly on the sustainability of wage growth, which has been accelerating at the fastest pace in three decades. Prime Minister Fumio Kishida now wants to see pay hikes that will be "several percentage points higher" than the country's inflation rate.
Japan's widespread seniority-based employment system, low labor productivity, and workers' reluctance to hop from one job to another have been among the factors behind its tepid wage growth for years.