Tsuru Kotaro, Program Director and Faculty Fellow, Research Institute of Economy, Trade and Industry (RIETI) Wage increases are attracting intense attention as a touchstone for the future course of the Japanese economy. The Japanese government and the Bank of Japan are closely watching how the forthcoming shunto spring wage negotiations will play out. There are signs of a shift in the long-entrenched norm that prices and wages simply do not rise, which has permeated the nation throughout the long period of deflation, and now is the time to aim for an increasing, virtuous circle between prices and wages. This article will examine whether such a virtuous circle can become sustainable. First, when assessing the shunto wage increase, it is important to understand that it usually consists of two portions—the regular annual pay increase that company employees receive, and the increase in the base pay. It is ... ... [Read more]