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Why is the average salary in Japan so low?


Japan is known for its technological advancements, unique culture, and exquisite cuisine. However, the average salary in the country is relatively low compared to other developed nations. While the cost of living in Japan is high, many people struggle to make ends meet despite working full-time jobs. This article will delve into the reasons why the average salary in Japan is so low.

Economic factors

One of the main reasons for low salaries in Japan is due to its economic structure. The country has a high level of income inequality, with a small percentage of the population earning most of the wealth. The government also places a higher emphasis on economic growth rather than increasing wages. Additionally, there is a lack of competition in certain industries, which allows companies to pay lower salaries to their employees.

Japanese Snack Box

Education system

Japan’s education system is known for its rigor and emphasis on academic achievement. However, this also means that students are pushed towards attending prestigious universities and obtaining high-paying jobs. This creates a competitive job market where employers can offer lower salaries because there are more qualified candidates available.

Working culture

Japan has a unique working culture that includes long working hours and a strong emphasis on company loyalty. Many employees work overtime without additional compensation or take on multiple part-time jobs to make ends meet. This leads to a situation where the average salary may seem low due to the number of hours worked.

Growth stagnation

Japan’s economy has experienced a period of stagnation since the 1990s, which has led to lower wage growth. This has been exacerbated by an aging population and declining birth rates, which have resulted in fewer workers and less demand for labor.

Gender inequality

Women in Japan face significant challenges in the workforce, including lower pay and fewer opportunities for advancement. This has contributed to the overall low average salary in the country.

Immigration policies

Japan has strict immigration policies, which limit the number of foreign workers in the country. This has created a situation where certain industries, such as agriculture and construction, face labor shortages. However, instead of increasing wages to attract more workers, many companies resort to using machines or paying lower salaries.

Small business dominance

Small businesses dominate the Japanese economy, which often means lower salaries and fewer benefits for employees. These businesses may not have the financial resources to offer competitive salaries or benefits packages.

Social welfare system

Japan’s social welfare system is relatively generous, which means that some people may choose to work part-time or freelance instead of taking on full-time jobs with lower salaries. This can create a situation where companies are unable to find enough full-time workers and must rely on part-time employees.

Global competition

As global competition increases, Japanese companies are under pressure to reduce costs and increase efficiency. This often means reducing salaries or outsourcing jobs to countries with lower labor costs.

Cultural factors

Japanese culture places a strong emphasis on humility and avoiding conflict. This can make it difficult for employees to negotiate for higher salaries or better working conditions. Additionally, there is a cultural expectation that employees should be willing to work long hours without complaint.


In summary, the low average salary in Japan can be attributed to a variety of factors, including economic structure, education system, working culture, growth stagnation, gender inequality, immigration policies, small business dominance, social welfare system, global competition, and cultural factors. While these challenges may seem daunting, there are opportunities for change through government policies and increased awareness of labor issues.

Why are wages not increasing in Japan?

According to experts, Japan’s wages have been negatively impacted due to its low productivity rate compared to the OECD average. The amount of output per hour from workers in Japan is lower and is likely the primary reason for stagnant wages, as stated by Yamaguchi.

Why are Japanese wages stagnant?

The reason for the lack of growth in payrolls in Japan is most likely due to the country’s long-standing issue of deflation and a mindset that supports it. Japanese companies are hesitant to raise prices for cost-conscious consumers, leading to lower wages. This has been a problem for many years.

Is Japanese income low?

Despite being one of the wealthiest nations in the world, Japan has historically had relatively low wages. According to recent OECD data, the average wage in Japan for 2021 was $40,949 USD, which ranks as the 11th lowest out of the organization’s 38 member countries.

What is a livable wage in Japan?

Due to Japan’s overall expensive cost of living, a yearly income of 4 million JPY (approximately 36,700 USD) is considered a decent salary for living comfortably. However, families may want to aim for an income of 6 million JPY (around 55,000 USD) to support their needs.

Why is unemployment so high in Japan?

There are various reasons for unemployment, such as a decrease in demand during a recession, leading to layoffs by companies. Another reason is a mismatch between workers and available job opportunities, for example, if there are too many lawyers and not enough doctors in a particular area.

Are workers underpaid in Japan?

The currency, along with an increase in inflation, has highlighted the fact that Japanese workers are severely underpaid compared to global standards, despite their reputation for being hard-working. This truth is becoming more apparent.

Possible solutions

To address the issue of low salaries in Japan, there are several possible solutions. One approach is to increase the minimum wage, which would provide a basic level of income for workers. The government could also implement policies that encourage companies to pay higher salaries and offer better benefits packages.

Another solution is to promote greater gender equality in the workforce. This could include measures such as mandatory maternity leave, flexible work arrangements, and programs to encourage women’s career advancement.

The government could also consider reforming the education system to encourage more diverse career paths and reduce the emphasis on high-paying jobs. This would create a more balanced job market with better opportunities for workers across different sectors.

To address the issue of long working hours, the government could implement policies to promote work-life balance, such as limiting overtime hours and encouraging companies to offer more flexible work arrangements.

Finally, Japan could consider increasing its openness to foreign workers. This would help address labor shortages in certain industries and provide opportunities for skilled workers from other countries to contribute to the Japanese economy.


In conclusion, the issue of low salaries in Japan is complex and multifaceted. It is caused by a combination of economic, social, cultural, and political factors that have been present in Japan for many years. However, there are opportunities for change through government policies and increased awareness of labor issues. By addressing these challenges, Japan can create a more equitable and sustainable economy that benefits all its citizens.

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