The puzzle of low wage growth

One explanation for the persistent weakness of wage growth in Japan, despite the tightness of the labour market, is that employment growth has been skewed towards positions with low hours and low pay. But that doesn’t seem to be the case: the share of temporary and part-time workers in the workforce has not risen in the past few years. In fact, recent wage growth is almost exactly in line with what the fundamentals of the labour market might suggest.

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