No pressing need for wage hike: Kuroda

Bank of Japan Governor Haruhiko Kuroda assured that Japanese firms have no pressing need to increase wages as they have kept jobs during the previous year’s pandemic-induced economic recession. This means that the country’s firms have no need to fill job vacancies as quickly as U.S. companies.

Kuroda informed on Wednesday that the surge in demand triggered by the U.S. economy’s reopening, as well as layoffs by U.S. firms to cope with the initial effect of the pandemic, have caused serious bottlenecks and labor shortages in Japan.

This forced U.S. firms to increase wages to secure employees, and raise the prices of goods and services to combat excess demand.

Japanese firms have kept to their custom of retaining jobs and keeping wages low instead to ride out the economic slump caused by the pandemic.

As a result, supply-side constraints in Japan have not been as severe as those in the U.S. Kuroda pointed to this as the reason why there has been “no pressing need” for firms to raise wages and prices.

Kuroda also credited the Japanese public’s “cautious” sentiment on the outlook for keeping inflation low.