Labor shortage in Japan and what that means for you Part 5: Wage hikes
Japan’s labor market is undergoing a quiet but powerful transformation. As the country grapples with a persistent labor shortage, companies are being forced to rethink how they attract and retain talent. One of the most visible outcomes? Wage hikes.
According to a survey by Teikoku Databank covering approximately 10,000 companies, the percentage of firms planning to “improve wages” has steadily increased over the past decade. The graph shows a clear upward trend from FY2013 onward, peaking around FY2019, dipping slightly during the pandemic years, and rising again toward FY2024.
Why are wages rising?
The answer lies in demographics and economics. Japan’s aging population and declining birthrate have created a shrinking workforce. With fewer young people entering the labor market, companies are facing intense competition for skilled workers. To stay competitive, many are turning to wage increases as a strategic lever.
This shift marks a departure from Japan’s traditionally conservative approach to compensation. For decades, wage growth was stagnant, and lifetime employment often meant slow salary progression. But now, necessity is driving innovation.
What this means for you
Whether you're a job seeker, an HR professional, or a business owner, this trend has direct implications:
For job seekers: You may find better compensation packages, especially in industries hit hardest by labor shortages, like healthcare, logistics, and hospitality.
For HR professionals: Wage hikes are not just about numbers, they’re about positioning your company as an attractive, sustainable place to work. This is a chance to rethink total rewards, including wellbeing and flexibility.
For business owners: Budgeting for wage increases is no longer optional. It’s a strategic investment in your workforce and your future competitiveness.
Mindfulness and meaning in the workplace
As wages rise, so does the opportunity to rethink what work means. Younger generations in Japan are increasingly prioritizing purpose, balance, and wellbeing over traditional metrics of success. Wage hikes alone won’t solve the labor crisis, but when paired with mindful leadership, flexible work arrangements, and inclusive cultures, they can be part of a broader solution.
Looking ahead
The data suggests that wage hikes are becoming a norm, not an exception. As Japan continues to navigate demographic challenges, companies that embrace this shift, and align it with a deeper commitment to employee wellbeing, will be better positioned to thrive.
If you are interested in working for a Japanese company abroad or in Japan itself, and especially if you speak some Japanese, this means you have better prospects than ever before. If you want to prepare for such a job, why not get some additional training!
Want to know more? At Japan Consulting Office, we specialize in equipping professionals to thrive in cross-cultural environments. Whether you’re looking for group training or one-on-one sessions, we’ve got you covered!
If you want to learn more about bridging language and cultural gaps in Japanese business, why not join one of our sessions! Here’s the link to upcoming sessions (make sure to select your timezone
