Shuto Wakana (首藤 若菜), a professor at Rikkyo University, points out that Japanese companies have continued to protect employment by restraining wages, leaving nominal wages unchanged for an extended period and causing real wages to decline. She provides a detailed account of why wages and prices have been weakly linked, as well as the institutional and customary factors behind wage restraint.
Japanese companies' performance deteriorated amid the bursting of the bubble and the financial crisis in the late 1990s. However, despite the recovery in corporate performance from the 2000s onward, wages did not rise, and nominal wage restraint continued for an extended period. The expansion of non-regular employment lowered average wages, while permanent employees also prioritized job security by adjusting bonuses and working hours. In the annual spring wage negotiations, coordinated demands weakened, and securing scheduled wage increases rather than base pay increases remained the priority for many years.
Against this backdrop, real wages in Japan declined over the long term. However, increases in import costs were not fully passed through to domestic prices, and the share allocated to wages was relatively constrained. Corporate profits were maintained over the long term, but wage growth did not keep pace.