My answer to the question in Japan is that, against the backdrop of acute labor shortage, corporate firms in Japan are trying to absorb wage cost pressures without passing them on to sales prices, through such measures as labor-saving capital expenditure, and streamlining their business processes, by doing away with excessive or unnecessary services.
For instance, Rodrick and Subramanian, in an IMF working paper of 2004, point out that India seems to have large amount of productivity growth from a relatively modest reforms. A more recent paper by Barry Bosworth, Susan Collins, and Arvind Virmani (2006) confirms this trend.