What's happened
Multiple countries are announcing significant wage hikes: Japan's public sector sees its largest increase since 1991, Japan's minimum wage is projected to rise by 6%, and the UK plans to boost its minimum wage to meet a 'genuine living wage' goal. These moves reflect efforts to support inflation and living standards amid economic shifts.
What's behind the headline?
The recent wave of wage increases signals a strategic shift in economic policy. Japan's record public sector wage hike aims to stimulate domestic demand and combat deflationary tendencies, aligning with BOJ Governor Ueda's emphasis on wage-price linkages. Meanwhile, the UK’s focus on raising the minimum wage to at least two-thirds of median earnings reflects a political commitment to improving living standards, though the Resolution Foundation warns that the pace remains cautious due to labor market concerns. These moves suggest a broader recognition that wage growth is essential for sustainable inflation and economic stability. However, the divergence in approaches—Japan's targeted public sector increase versus the UK's policy to narrow wage gaps—indicates differing economic priorities. The extension of the UK's remit to address age-based wage disparities could further influence wage dynamics, potentially reducing inequalities but complicating wage-setting processes. Overall, these developments will likely lead to increased wage pressures globally, with potential impacts on inflation, consumer spending, and monetary policy adjustments in the coming months.
What the papers say
The Japan Times reports Japan's public sector will see its largest wage increase since 1991, affecting roughly 280,000 workers, as part of efforts to support stable inflation. Bloomberg highlights Japan's 6% projected minimum wage hike, the largest since 1978, driven by rising prices. The UK’s Independent and Bloomberg detail the UK’s plans to raise the minimum wage to between £12.55 and £12.86 in 2026, with the Low Pay Commission extending its remit to address wage disparities for younger workers. The Resolution Foundation offers a cautious perspective, noting the UK’s approach remains steady despite ambitious rhetoric, citing recent labor market data and policy constraints. These contrasting reports underscore a global trend toward wage growth, but with differing strategies and levels of urgency, reflecting each country’s economic context and policy priorities.
How we got here
Recent wage proposals across Japan, the UK, and other countries are driven by economic pressures such as rising living costs and inflation. Japan's government is responding to inflationary pressures with a record public sector wage increase, while the UK aims to align its minimum wage with median earnings to promote inclusive growth. These developments follow years of cautious wage policy adjustments amid economic uncertainty.
Go deeper
Common question
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What is the forecast for the UK minimum wage in 2026?
With ongoing debates about living wages and economic stability, many are wondering what the future holds for UK minimum wages. The Low Pay Commission has recommended a rise to between £12.55 and £12.86 in 2026, aiming to reach at least two-thirds of median earnings. But what does this mean for workers, businesses, and the broader economy? Below, we explore the key questions about the UK’s minimum wage forecast and its implications.
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Why Are Countries Like Japan and the UK Increasing Wages Now?
Many countries are raising wages amid economic shifts, inflation, and cost-of-living concerns. But what's driving these increases, and what do they mean for workers and the economy? Below, we explore the reasons behind the recent global wage hikes and what they could mean for the future.
More on these topics
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Japan is an island country of East Asia in the northwest Pacific Ocean. It borders the Sea of Japan to the west and extends from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south.
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Angela Rayner is a British politician serving as Shadow First Secretary of State since 2020, and has been Member of Parliament for Ashton-under-Lyne since 2015.
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Jonathan Neil Reynolds (born 28 August 1980) is a British politician who has served as Secretary of State for Business and Trade and President of the Board of Trade since July 2024. A member of the Labour and Co-operative parties, he has been the Member..
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The Low Pay Commission is an independent body in the United Kingdom, established in 1997, that advises the government on the National Minimum Wage.
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The Bank of Japan is the central bank of Japan. The bank is often called Nichigin for short. It has its headquarters in Chūō, Tokyo.