Yves here. This is intriguing. Paging the FOMC…
However, there is underemployment in Japan, if nothing else in the form of freeters, as in the precariat that does not have salaried work. This was a post-financial-crisis development designed to preserve overall employment levels at the expense of the quality of employment for some. So this suggests that the existence of a precariat class of employees serves the same function as higher levels of unemployment: it checks the ability of workers to ask for better pay and conditions even in the face of nominally robust employment.
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. Originally published at
Just a quick observation today as Japan released its October unemployment rate at 2.8%, way below supposed full employment. Yet it’s still waiting for wage inflation to kick in, for about twenty years now…
Japan is unique in some ways with its social contract between dead wood salarymen and other stabilising institutions, still as the leading indicator for our post-crisis developed economies it’s hardly irrelevant:
- balance sheet recessions and their aftermath take generations to restore animal spirits for debt;
- aging population;
- advancing automation.
What it doesn’t have that other DMs do is inequality but that’s also a powerful deflationary force. Nor does it have a flood of cheap migrant labor which equally deflationary, especially when you’re already over-supplied.
Just sayin’, for all of you inflation hawks out there.
Looking at you, Bloxo, Boaky…