Despite remarkably low unemployment rates, Japanese wages appear to be stagnating. That Japan is facing a dual challenge of low real wage growth and labour shortages appears paradoxical and raises the question of what policy actions might move wages in this context. Japan’s wages have stagnated despite a historically low unemployment rate of 2.4 per cent just before the COVID-19 pandemic. Labour shortages typically arise not from strong demand for labour, but from a declining supply of workers, which Japan is undoubtedly facing. The population aged 15 to 64 declined by over 10 million between 2000 and 2022, with the ... (full story)