Motivation Factors in the Workplace – A Look at 2025 Trends in Japan

At FocusCore, we have been introducing insights into employee motivation through our annual salary guides for the past few years. Historically, factors such as career development, corporate culture, and work-life balance have been emphasized. However, for the first time in the 2025 edition, salary has emerged as the most significant factor. What has caused this shift, and what does it indicate about the current state of Japanese society?

Inflation: The Key Driver Behind Salary Expectations

One of the main factors contributing to this shift is the significant inflation. As the prices of goods and services increase, it is only natural for the importance of salary to grow. This has led many individuals to seek higher salaries, often through job changes. Particularly in recent years, the prices of essential goods like rice, eggs, and vegetables have increased sharply. In fact, the rice price surge that began in mid-2024—now referred to as the “Reiwa Rice Crisis”—is still ongoing into 2025, with no signs of a resolution.

Along with food, other non-essential items, such as chocolates and orange juice, have also seen price hikes, affecting nearly every aspect of household spending.

Naturally, as living costs rise, wages generally tend to follow suit. In our 2025 salary guide, 60% of respondents reported an increase in their salaries. However, fewer than half (34%) saw an increase in their bonuses, which means many employees are able to keep up with the inflation but are still limiting larger discretionary spending.

While this is indicative of a moderately weak economy, the situation has been exacerbated by tax reforms.

The Impact of Tax Reforms

Recent tax changes have further complicated matters. For instance, the imposition of deduction caps for older workers has increased the financial burden on retirees. Additionally, the planned end of the mortgage interest deduction by the end of 2025 makes homeownership even more challenging. Projections indicate that both income and corporate taxes are likely to rise, which means employees might see their salaries increase, but their take-home pay could remain stagnant or even decrease.

Moreover, national pension premiums and health insurance fees have already been raised, further increasing the demand for higher salaries.

Post-COVID Economic Recovery

It’s not just food and taxes that are putting financial pressure on individuals. With the recovery from the COVID-19 pandemic, land prices, which had previously dropped, have started to rise again, largely due to increased demand for remote workspaces. This has led to higher rent costs, while property owners are also facing increases in property tax and urban planning taxes. All these factors are making it increasingly difficult to save money or maintain financial stability.

The Impact of the Yen Depreciation

Lastly, the recent depreciation of the yen has made it easier for foreign companies to enter the Japanese market. While this isn’t inherently a negative development, a weaker yen means that Japanese labor is becoming cheaper on the global stage. Foreign companies can now hire Japanese talent at a lower cost, and as a result, competition for top-tier employees is not limited to local companies but also involves international players. To retain top talent, higher salaries have become a critical factor.

In such an environment, if you are Japanese and currently living and working outside of Japan, it might be wise to wait before returning to Japan to look for a job. While there are many reasons to return, such as family, food culture, and safety, if you are able to wait, it would be better to hold off. The current economic conditions suggest that wages in Japan are likely to be lower than what you are earning now, and waiting for the economic recovery could prove to be a more beneficial choice.

Is High Pay the Key to Motivation?

Given these circumstances, one might assume that increasing salaries is the best way to retain employees. However, this isn’t necessarily the case. The desire for a higher salary is often a surface-level manifestation of a deeper need: security.

Employees in Japan, particularly those in the workforce, are constantly seeking stability—stability in the form of long-term employment, even amid economic uncertainty. This assurance that an employer will continue to provide work, regardless of external circumstances, is highly valued. In fact, even if a company offers average salaries, it can retain employees by ensuring job security. This creates a unique differentiator, especially when competing with companies offering higher salaries.