Japan’s unemployment rate is the lowest it has been since the mid-1990s and the job-to-applicant ratio is approaching its bubble year peak. Regular wages are rising at the fastest pace in years, and wages of part time workers, which are more responsive to labour market developments, have also picked up. These trends are encouraging but there is still some way to go: wage growth will have to become much faster to drive inflation to the Bank of Japan’s 2% target.
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