In my 23 years in executive recruitment, I can’t remember a time where wage inflation in Japan has been this visible. Just to set the context, most of what I see is at the senior end of the investment banking and securities market in Tokyo, so this isn’t a blanket view across every industry.
Japan has just gone through its strongest nominal wage growth in decades. The 2024 spring negotiations came in at around 5.1%, and 2025 was slightly higher again. On the face of it, that sounds like a real shift.
But when you adjust for inflation, it’s a different story. Real wages actually fell again in 2025, which makes it four consecutive years of decline. So yes, salaries are going up, but not in a way that people actually feel.
If you look across the region, it’s quite different. Singapore has been seeing consistent real wage growth, and Hong Kong is somewhere in the middle. Japan is still lagging behind in real terms.
So while the headlines suggest momentum, it hasn’t really translated into stronger purchasing power or closed the gap with other financial centres.
Now if you step back and look at hiring economics, this is where it gets interesting.
On a like for like basis, it’s still significantly more expensive to hire in Hong Kong and Singapore than it is in Tokyo. Base salaries are higher, bonus expectations are higher, and total comp can easily be 1.5 to 3 times what you’d pay in Japan for similar roles. That’s before you even get into real estate, where both cities are among the most expensive globally.
Japan, by comparison, is cheaper across the board. Employment costs are lower, office space is cheaper, and wage inflation has historically been more stable.
On paper, it should be a pretty obvious place to scale technology and operations.
But that’s not what’s happening.
Most of those roles are still being built out in Hong Kong, Singapore, and increasingly in offshore hubs. Japan just isn’t getting the share of headcount you’d expect given the cost advantage.
And this is where, to be honest, things don’t quite add up.
If you look at compensation over a longer time horizon, the recent “inflation” looks a lot less dramatic. The data we’ve tracked internally going back to 2013 shows that senior compensation has more or less come full circle. Managing Director comp at US Tier 1 firms was already in the ¥85M–¥130M range back then, with top end trading roles pushing ¥200M.
By 2016–2017, those numbers came down quite a bit. What we’ve seen since 2023 isn’t a step change, it’s more of a reset back to where things were.
What’s also quite striking is how uneven it’s been. At the junior and mid level, comp hasn’t really moved that much. Base salaries are broadly similar, and most of the variation is in bonus. At the senior end, though, the upside has opened up again, especially in revenue-generating roles.
So it’s not really broad wage growth. It’s more that the ceiling has moved, while the floor hasn’t.
Which brings you back to the bigger question.
If Japan is still structurally cheaper, why isn’t more of this work moving here?
From where I sit, it’s not really about cost anymore. It’s more about how Japan is perceived internally within global firms.
Some of it is regulatory. Some of it is language and local interface requirements. Some of it is just that Japan is seen as harder to scale. But a big part of it is inertia. Singapore and Hong Kong are established hubs. They’re easy to justify internally. Nobody gets questioned for putting more headcount there.
Japan usually requires a longer conversation.
And for large investment banks, these aren’t small decisions. Shifting headcount or building out a new hub takes time, planning, and buy-in from multiple stakeholders. Cost alone isn’t always enough to move that.
That said, the economics are already there.
The yen is weak. Real estate is cheaper. Employment costs are lower. And most firms already have a footprint in Japan. On paper, it’s a very strong case.
But in practice, Japan is not losing on cost. It’s losing on perceived complexity and internal bias.
Until that changes, the advantage stays theoretical. The numbers make sense, but the capital and the jobs keep going somewhere else.
And that’s the disconnect.
