TOKYO — Japan's labor market is splitting in two. Companies are competing fiercely for young recruits and raising their pay, while workers in their 40s and 50s—the "ice-age" generation that entered the workforce between 1993 and 2004—are largely frozen out of wage growth.
These workers came of age during Japan's economic collapse. After the bubble burst, companies stopped hiring broadly. Many in this cohort spent formative career years in precarious, low-wage jobs or without steady work at all.
Today, companies are not extending salary increases to their older, established workers. The reason is straightforward: employers believe workers in their 40s and 50s are unlikely to leave. Mid-career job switching remains extremely limited in Japan, particularly for workers in their late 40s and beyond, leaving few options for these employees to move to new roles or companies.
The result is a "no upside, no downside" dynamic. Strong performance yields minimal additional rewards. Poor performance carries little risk because demotions and dismissals are rare. Workers remain employed but often disengaged, with job satisfaction and performance frequently declining by their early 50s.
Japanese companies have the worst wage-growth record among Organization for Economic Cooperation and Development nations. Many are posting soaring profits but not deploying those gains into raises for workers across the board.
The "Employment Ice Age" was triggered by corporate cost-cutting during the "Lost Decade." Companies protected older workers by not hiring new graduates, a strategy that left an entire cohort stranded with unstable or no work during their prime earning years.
