Japan’s economy will expand the most this year since 2013. Yet the unemployment rate hasn’t fallen any further since the start of the year. This isn’t due to a surge in productivity that has reduced labour demand. In fact, productivity growth has been rather sluggish. Instead it’s a sign that the slack in the labour market has all but gone and net increases in employment are now dependent on attracting people who hadn’t previously been looking for work. In these circumstances, employers will find themselves under greater pressure to raise wages over the coming year.
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