While some say the economic expansion will continue, the allocation of corporate profits, retained earnings and increased shareholder returns were cited as factors limiting wage growth. The program outlined the current challenges and areas of focus going forward.
During the program, it was explained that in its July Monthly Economic Report, the government assessed domestic economic conditions as “recovering moderately,” and that the economic expansion had reached 74 months. Despite this, people expressed a sense that their savings were not increasing.
Ordinary profit has remained at historically high levels, exceeding ¥114 trillion in fiscal 2024 and reaching approximately ¥124.8 trillion in fiscal 2025. In line with this, the outlook indicated that corporate tax revenue was also at a record-high level.
Although corporate profits are increasing, wage growth among regular employees at large companies remains limited, and it was pointed out that funds are being directed to retained earnings and shareholder returns. It was explained that the labor share of income is currently around 40%, down from approximately 70% in the 1990s, highlighting the limited extent to which higher profits are reaching wages.