Economic and Labor Situation in Japan, December 2025

First Tripartite Conference under the Takaichi Administration

Prime Minister Sanae Takaichi held the first tripartite Government–Labor–Management Council meeting of her administration at the Prime Minister’s Office on November 25. Regarding the 2026 spring wage negotiations, she called for cooperation to achieve a “wage increase on par with” 2024 and 2025, when wage growth exceeded 5%. She stated that her government would work to improve the environment for wage hikes, including ensuring thorough price pass-through and supporting growth investments by small and medium-sized enterprises (SMEs).
From the business community, Keidanren Chairman Yoshinobu Tsutsui attended the meeting, while RENGO President Tomoko Yoshino represented labor. In relation to the wage hike rate in the spring wage negotiations, the Prime Minister also requested cooperation toward achieving a “base pay increase that outpaces inflation,” keeping in mind the 5.52% in 2025 and 5.33% in 2024. However, she is believed to have refrained from raising the target for the 2026 negotiations due to forecasts anticipating that the rate may slow as corporate earnings weaken.
Former Prime Minister Ishiba stated at the same council meeting in November 2024 that Japan would “continue efforts to achieve the nationwide average minimum wage of 1,500 yen in the 2020s,” but Prime Minister Takaichi made no mention of a minimum wage target. Achieving 1,500 yen within the decade would require annual increases of 7.3%, including in fiscal 2025, whereas even the historic record increase in fiscal 2025 reached only 6.3%. With long-standing views that this target would prove difficult to achieve even under the Ishiba administration, Takaichi has avoided inheriting this goal.
The point emphasized in the Government–Labor–Management Council was the policy of “not leaving wage increases entirely up to businesses, but rather creating an environment in which continuous wage hikes are possible.” She listed measures including thorough enforcement of price pass-through and proper trading practices, including in public procurement, as well as stronger support for growth investments by small and micro-sized enterprises that engage in wage hikes.
RENGO, too, in its proposal announced in October for the 2026 spring wage negotiations, set forth the goal of putting real wages on a rising trajectory of 1%. At a press conference on the 10th, Keidanren Chairman Tsutsui stated, “Next year’s spring wage negotiations will strongly put forward the policy of ‘further entrenchment.’” Government, labor, and management share the recognition that further wage increases are necessary.

Labour Force Survey Monthly Results¹

(1) The number of employed persons in October 2025 was 68.65 million, an increase of 520,000 over the same month the previous year. By gender, this included 37.06 million men, up 20,000, and 31.59 million women, up 500,000 from the previous year, the highest level since comparable data became available in January 1953.

(2) Unemployment
The number of unemployed persons in October 2025 was 1.83 million, up 130,000 from the same month in the previous year.
The seasonally adjusted unemployment rate in October was 2.6%, unchanged from the same month the previous year, marking the highest level in 15 months, as labour market conditions remained tight. The unemployment rate was 2.8% for men, up 0.1 points, and 2.4% for women, unchanged from the same month in the previous year.

Units: 10,000 persons

(3) Job Availability
Japan’s job availability in October stood at 1.18, down 0.02 from the previous month. This ratio means there were 118 job openings for every 100 job seekers.
The ratio of regular employee job offers to applicants was 0.99, down 0.01 from the previous month.
The ratio of new job offers to applicants, a leading indicator for the labour market, was 2.12, down 0.02 from the previous month. The number of new jobs offers decreased 6.4% from the same month the previous year. By industry, new job offers fell in all 11 major sectors except education, which posted a 10.5% increase from a year earlier.

Industrial Production²

Industrial Production Fluctuates Indecisively
Industrial output in October increased 1.4% over the previous month, driven by a 6.6% rise in the motor vehicles sectors.
Production, shipments and inventories increased, while inventory ratio decreased. The industries that mainly contributed to this increase were as follows: (1) motor vehicles; (2) electrical machinery and information and communication electronics equipment; and (3) transport equipment (excluding motor vehicles), in that order.
According to the Survey of Production Forecasts in Manufacturing, production was expected to decrease 1.2% in November and decrease 2.0% in December.

October  2025           2015 average = 100

Family Income and Expenditure Survey³

The data is a key indicator of private consumption, which accounts for more than half of Japan’s gross domestic product.
(1) Expenditure of Households of Two Persons or More
Average monthly consumption expenditure of households of two or more persons in October was 306,871 yen, up 0.3% in nominal terms but down 3.0% in real terms over the previous year, marking the first decline in six months, as outlays on cars plunged and food purchases remained sluggish amid inflation.

(2) Income and Expenditures for Workers’ Households
Average monthly income per household stood at 599,845 yen, up 3.3% in nominal terms but down 0.1% in real terms from the previous year. The average level of consumption expenditure was 338,977 yen per month, up 3.5% in nominal terms and up 0.1% in real terms year-on-year.

Consumer Prices⁴

The consumer price index (CPI) in October was 112.8 (2020 = 100), up 3.0% over the previous year and 0.4% over the previous month as food costs remained high. Core inflation (CPI less food and energy) was up 3.1% over the previous year and up 0.4% over the previous month. The inflation rate has remained at or above the Bank of Japan’s 2% price stability target since October 2022.
Food prices, excluding fresh items, climbed 7.2% over the previous year in October, driven by surging costs for items such as rice, chocolate, and chicken. Prices for rice, Japan’s staple food, soared 39.6%. As the government reinstated its subsidies to alleviate the burden of utility bills on households between January and October, energy prices were up 2.1% over a year earlier and up 0.3% over the previous month.

October 2025

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