Labor cost restraint by firms is persistent, as they are facing greater exposure to global competition and capital market discipline. Recently, in particular, sluggish growth in corporate profits resulting from the surge in materials prices has been leading firms, especially small ones, to restrain wages.
Moreover, the change in the composition of the workforce, resulting from the fact that the high-salaried baby-boomer generation started to retire in 2006 and from increases in the share of part-time workers, has also contributed to the weakness in wages.