Since the bursting of the bubble economy, Japan’s economy has undergone a severe and unavoidable adjustment process. Looking at the labor market from a macroeconomic perspective, since the latter half of the 1990s, managers and workers in Japan have put priority on maintaining employment, and to do so, workers accepted reductions in wages.
Comparing consumer prices in Japan with those in other advanced economies, what stands out is the decline in service prices, implying that while flexible wage adjustments have been effective in terms of preventing an increase in unemployment, in return, they have put consistent downward pressure on the prices of labor-intensive services.