Japan’s corporations are spending less on wages

Corporations have been spending less of their profits on wages since the end of the bubble economy about 30 years ago, a government study finds.
By: | February 9, 2022

This observation was made from analysing data from the 1990s through the 2010s, said the Cabinet Office.

The biggest decrease in spending on labour was from large non-manufacturers. The percent of profits spent on labour fell by 8.2 percentage points over two decades to 48.4%.

The situation was similar at major manufacturers, though the drop was smaller at 2.2 percentage points.

Among smaller firms, the wage share was down 1.2 percentage points at non-manufacturers compared to the decrease of 0.8 percentage points at manufacturers.

The Cabinet Office said the end of the economic bubble and the global financial crisis may have prompted companies to set aside more internal reserves in preparation for hard times.

Nevertheless, it added that it is important to create an environment where businesses are encouraged to invest and distribute what they earn, according to NHK.

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The global financial crisis of 2007-2008 ravaged entire economies, affected many businesses and hurt millions of people, including many who were not speculating in mortgage-backed securities.