Chart of the week: Japan’s coming wage boom

One major cause of Japan’s malaise has been stagnant wages, but this chart from SMBC Nikko suggests that’s about to change. Unemployment is now not far above the estimated ‘structural’ or ‘natural’ rate of unemployment.

Economic theory holds that when unemployment drops below this level, it puts upward pressure on pay. In the short term that might dent corporate profits, but longer term the economy should benefit from stronger demand.


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