Such flexibility in wage setting was attained not only through a reduction in bonus payments and an increase in the number of non-regular workers, but also the downward revision of fixed compensation for regular workers (Chart 21). As mentioned earlier, compared to the United States, price declines in Japan were attributed mostly to declines in services prices.
That reflected flexible downward revisions of nominal wages. The propensity to consume in Japan’s household sector increased even under deflation, partly owing to the fact that price declines were driven by unstorable services prices (Chart 22).