BoJ Governor Kazuo Ueda told a Jackson Hole panel on Saturday that Japan’s labor shortages are becoming “one of our most pressing economic issues.” He highlighted that wage growth, once concentrated in large enterprises, is now spreading to smaller firms.
Ueda said that barring a major negative demand shock, “the labor market is expected to remain tight and continue to exert upward pressure on wages”. He noted that the demographic shifts set in motion since the 1980s are now driving both “acute labor shortages and persistent upward pressure on wages”
According to Ueda, these shifts are forcing supply-side adjustments, including higher participation rates, greater labor mobility, and increased capital-labor substitution. He pledged the BoJ will “continue to monitor these developments closely and incorporate our assessment of evolving supply-side conditions into the conduct of monetary policy.”
