Wage increases likely in Japan.

In a long speech assessing economic developments and looking forward to 2007 on December 25, 2006, the Governor of the Bank of Japan noted a phrase often heard in Japanese economic circles whenever the topic of the lack of regular wage increases comes up. "This seems to be responsible for the often-heard statement that it is difficult to realize that Japan is in the middle of the longest postwar economic expansion."

In analyzing the situation, the Governor expressed the view that pressure on wages would begin to increase in 2007 after a period of relative calm. The lack of pressure was due to, "employees, having experienced a severe employment situation, continue to prefer stable employment to a wage increase."

But now the labor market is tightening. And wages are almost certain to rise. The Governor said, "Our basic view is that private consumption will remain on the rise if increases in household income are in prospect." He pointed out that wages for part-time workers are already going up.