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Japan blames slow wage growth to paltry capital spending

Nonmanufacturing sector lags behind in labor-intensive model

Commuters crowd the streets in Marunouchi, Tokyo's central business district.

TOKYO -- Inadequate capital investment and low productivity, particularly in the nonmanufacturing sector, is holding back Japan's wage growth, the government argues in its upcoming white paper for fiscal 2017.

The report points out that Japan's economic recovery since November 2012 has led to "the first labor shortage in a quarter-century since the bubble economy" of the late 1980s and early 1990s. However, nominal wages rose more than 3% annually during that era compared to just 0.4% in the current expansion. 

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