Why Wages Don't Feel Higher Despite 5%+ Shunto Gains — The Structure Behind Four Consecutive Years of Negative Real Wages

The 2026 Shunto wage negotiations produced a historic result. The overall wage increase rate reached 5.26%, with small and medium enterprises also recording 5.05% — above 5% for the second consecutive year[1]. It was the highest level in 33 years.

On paper, these numbers suggest that a better era has arrived for Japanese workers. Yet the subjective experience of most workers tells a different story.

The explanation lies in the divergence between nominal and real wages. Real wages in 2025 declined 1.3% year-on-year — the fourth consecutive annual decline[2]. Nominal wages rose 2.3% year-on-year[3] (cash earnings index, 111.7 against a 2020 average of 100), but consumer price inflation exceeded that gain, eroding purchasing power.

The take-home number went up. The amount it can buy went down. That is the structural explanation for why wages "don't feel higher."

The Sectoral Gap: A Threefold Spread Among "Full-Time" Employees

⚡Electricity, Gas & Water

8320K JPY

🏦Finance & Insurance

6560K JPY

💻Information & Telecom

6600K JPY

📊All Industries Avg.

4600K JPY

🏥Nursing Care

4050K JPY

🏪Retail

3720K JPY

🍽️Accommodation & Food

2790K JPY

Source: National Tax Agency (2024) / MHLW Wage Census

The limits of talking in averages

Discussing wages in terms of averages obscures critical variation. The disparity across sectors is vast.

In 2024, average annual income was highest in utilities (electricity, gas, heat and water supply) at ¥8.32M, and lowest in accommodation and food services at ¥2.79M[4] — a gap of roughly threefold.

Scheduled monthly pay in information and communications is 391.0[5] thousand yen (all workers, all ages). The highest-paying industry is electricity, gas, heat supply and water at 437.5[5] thousand yen; the lowest is accommodation and food services at 269.5[5] thousand yen. Care workers on a monthly salary in full-time posts averaged 338,200[6] yen a month, up 13,960[6] yen (4.3%[6]) on the year. The two are not on the same basis: the first is scheduled pay only, the second adds allowances and a share of bonuses.

Not a gap individual effort can close

This gap is structurally resistant to individual effort. Utilities and energy companies operate within regulated industries where cost pass-through is relatively straightforward, enabling stable profit margins. By contrast, food services, accommodation, and care work are labor-intensive sectors facing intense price competition; raising labor costs directly compresses already thin margins. The same degree of effort and dedication yields rewards that differ by a factor of three, depending solely on which sector one works in.

The ¥1,500 Minimum Wage Barrier

The government has set a target of achieving a national average minimum wage of ¥1,500 during the 2020s. With the national average at ¥1,121 in fiscal 2025, reaching ¥1,500 would require average annual increases of 7.3%[7].

Recent increase rates have hovered around 7%, but even if that pace is sustained, the target would not be reached until around 2031. Moreover, as the minimum wage rises, small and medium enterprises face higher labor cost burdens — raising the risk of business closures and employment reductions. The dilemma between wage increases and employment preservation remains one of the most intractable questions in Japanese SME policy.

Who Actually Benefits from Shunto?

In the 2026 Shunto, small and medium enterprises (unions with fewer than 300 members) also recorded a 5.05% wage increase[8], and the gap with large enterprises is narrowing. However, Shunto negotiation outcomes apply only to unionized firms. Japan's estimated union density stands at roughly 16%, meaning the large majority of workers do not directly benefit from Shunto results.

For part-time and fixed-term workers, Shunto wage increases have consistently trended lower than those for full-time employees. In a country where non-regular employment accounts for approximately 40% of the workforce, there is a structural disconnect between the "5%+ Shunto" headline and the lived experience of most workers.

International comparisons sharpen the picture of Japan's wage stagnation. In OECD average wage rankings, Japan places 24th out of 38 countries[9], approximately $11,700 below the OECD average in purchasing power parity terms.

Three decades from the early 1990s

In the early 1990s, Japan's average wages placed it firmly in the OECD's upper tier. Over the subsequent three decades, while other nations continued raising wages, Japan remained essentially flat. The accurate framing is not that "Japanese wages declined" — it is that "Japanese wages alone failed to rise."

The deflation loop, non-regular work, retained earnings

Several interlocking structural factors underlie this stagnation. First, prolonged deflation trapped firms in a cycle of "no price increases → no profit growth → no wage increases → no consumption growth → unable to raise prices." Second, the expansion of non-regular employment enlarged the supply of "cheap labor," dampening upward wage pressure on regular employment. Third, despite corporate ordinary profit reaching 106.7694 trillion yen[10] in FY2023 — the highest in the 64 years the survey has run, up 12.1%[10] on the year — management decisions continued to prioritize financial safety buffers over returning earnings to workers through higher wages.

The 2026 Shunto's 5%+ increase has the potential to begin puncturing this structure. But for real wages to turn durably positive, wage growth must exceed inflation "sustainably" — not for a single year but over several years. One exceptional year of wage increases cannot close a thirty-year gap.

Not how much to raise

The core question is not "how much of an increase is needed" but rather "why didn't wages rise in the first place?" Unless the underlying structure — the deflationary cycle, dependence on non-regular employment, and the prioritization of retained earnings over labor compensation — is directly addressed, the risk of reverting to a "Japan where wages don't rise" in the next economic downturn remains high.

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• Thirty Years of Wage Stagnation — Why Only Japan's Wages Didn't Rise（このサイトの記事）
• A 30-Year Sector-by-Sector Comparison of Real Wages in Japan（このサイトの記事）
• The ¥1.03M, ¥1.30M, ¥1.50M, and ¥2.01M Walls — A Complete Guide to Income Thresholds（このサイトの記事）

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• Introduction to Wellbeing Policy Design（このサイトの記事）

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References

2025年の実質賃金 −1.3%（毎月勤労統計調査） — 労働政策研究・研修機構（JILPT）. JILPT Japan Institute for Labour Policy and Training

令和6年賃金構造基本統計調査 — 厚生労働省. Ministry of Health, Labour and Welfare

2026年春闘 第1次集計 賃上げ率5.26% — 連合. nippon.com

2020年代に最低賃金1500円は達成可能か — 大和総研. Daiwa Institute of Research

2024年 世界の平均年収ランキング（OECD） — KOTORA JOURNAL. KOTORA JOURNAL

OECD Employment Outlook 2025: Japan Country Note — OECD. OECD

2026年春闘賃上げ率の見通し5.45% — 第一生命経済研究所. Dai-ichi Life Research Institute

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