This resulted in a vicious cycle: the income situation of households deteriorated due to a decrease in wages, restrained consumption led to a decline in firms' sales, and firms had no choice but to adjust their employment. The serious appreciation of the yen under deflation also caused prolonged deflation.
The bold and large-scale monetary easing conducted by the Bank since 2013 successfully put an end to the prolonged deflationary trend from which Japan's economy had suffered. In this process, the employment situation recovered and firms, as they saw improvement in their earnings projections, came to sense labor shortage.