Japan's Low-Wage Trend Continues... Average Salary of New College Graduates 20% Lower Than Korea
Japan's GDP Drops Sharply from 8th in 1990 to 28th in 2021
"Causes of Japan's Competitiveness Decline: Education Competitiveness Deterioration and Gender Inequality"
[Asia Economy Reporter Park Hyun-joo] It has been revealed that the average monthly salary of new employees in Japan is only about 2 million won, which is lower than that of Korea. Experts point to low labor productivity and the deep-rooted lifetime employment culture as the causes of stagnant wages for Japanese workers.
According to the Basic Survey on Wage Structure recently conducted by Japan's Ministry of Health, Labour and Welfare, the average monthly salary of new employees in Japan as of last year was 212,300 yen (approximately 2 million won). By gender, men earned 213,400 yen and women 211,000 yen. By education level, high school graduates earned 179,700 yen, university graduates 225,400 yen, and graduate school graduates 253,500 yen.
In particular, the wage growth rate for people in their 20s, who are entering society in earnest and working the hardest, has actually declined over the past 30 years. On the 28th of last month, the Nihon Keizai Shimbun (Nikkei) reported that when setting the salary level of people in their early 20s as 100 and comparing it to the salary level of people in their early 30s ten years later, it was 151 in 1990 but dropped to 129.4 in 2020. This means the wage growth rate decreased by 14% over 30 years.
Nikkei analyzed, "The wage growth rate for Japanese people in their 20s during the first 10 years after joining a company has decreased by more than 10% compared to 1990," adding, "Real income has also declined, leaving the future outlook for marriage and childbirth bleak." It emphasized, "To improve current social issues such as low birth rates, economic conditions including wage increases must change."
Currently, the average salary of new employees in Japan is lower than that of Korea. According to the Korea Employers Federation, the average annual salary of regular university graduate new employees in Korea in 2020 was 33.91 million won, more than 20% higher than that of Japanese university graduate new employees. This difference is also confirmed by statistics from the Organisation for Economic Co-operation and Development (OECD), which showed that in 2020, the average annual salary of Japanese workers was $38,515, while Korea's was $41,960. Other countries surveyed included the United States at $69,392, Germany at $53,745, and the United Kingdom at $47,147.
The causes of Japan's low wage trend are attributed to low labor productivity and the deeply rooted lifetime employment culture. Kenichi Omae, a Japanese economist and president of Business Breakthrough University, said, "Japan's labor productivity per capita ranks 26th among the 37 OECD member countries and is the lowest among G7 members," adding, "Along with low labor productivity, the influence of the lifetime employment culture means that even with low wages, workers tend not to change jobs easily, which is one of the reasons wages have stagnated." He emphasized the need to relax dismissal regulations, strengthen vocational training, and revitalize the labor market.
The reason Japanese workers are trapped in the low-wage cycle appears to be largely due to the long-term economic stagnation. When the bubble economy collapsed in 1990, Japan's GDP was $25,896, ranking 8th in the world. This was four times the level of Korea, which was $6,610 and ranked 42nd. Last year, Japan's GDP was $39,340, ranking 28th globally, while Korea's was $34,801, ranking 30th. Compared to Korea, whose GDP rapidly increased over 20 years, Japan has struggled.
Some attribute the decline in Japan's economic competitiveness to a decline in educational competitiveness. According to the Ministry of Education, Culture, Sports, Science and Technology's Science and Technology Policy Institute, the number of doctorate degree holders per one million people in Japan decreased from 131 in 2008 to 120 in 2018. This contrasts with about 400 in the United Kingdom and around 300 in Germany, Korea, and the United States.
Gender inequality is also cited as a cause of declining competitiveness. According to last year's World Economic Forum (WEF Davos Forum) Gender Gap Report, Japan ranked 120th out of 156 countries in the gender equality index. As of 2020, the wages of female workers were only 77.5% of those of male workers, significantly below the OECD average of 88.4%.
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