It was one month ago when we showed how, thanks to a lot of statistical sleight of hand, Japan had completely “revised” one year of increasing nominal base wages to declining or flat at best, confirming that all the much-touted wage “improvements” heading into the Japanese election of late 2014 in which Abe was reelected by a wide margin had been purposefully fabricated to give the impression that Abenomics is working, when in reality it was… well, see the pre- and post-revision data for yourselves:

If that had been the full extent of Japan’s labor data fabrication we would speak no more of it, however the rabbit hole goes much, much deeper.

As a reminder, in Japan where the Nikkei has been soaring ever since the Bank of Japan decided to crush the Japanese Yen the one missing component from the promised Abenomics recovery has been wage growth, because without rising wages there can be no sustained benign inflation of the kind that the Keynesian brains behind Abenomics require to proclaim success.

This is how Goldman summarized what the virtuous feedback loop of rising wages should look like:

The BOJ’s ultimate goal is to realize the following positive cycle: Increase in actual prices -> rise in inflation expectations -> wage hikes -> boost to consumer spending / improvement in corporate earnings -> inflation -> rise in inflation expectations -> sustained wage hikes in the corporate sector. The underlying notion is that the pursuit of both high wage growth and high inflation expectation ensures stable inflation

That’s the theory, the reality is far different because some two years after the start of Abenomics and the launch of Japan’s QE, nominal wages are about where they were when Abenomics started, while indexed real wages have never been lower!

The paradox of Japan’s lack of wage increases has become particularly glaring when one considers that just like in the US, Japan recently reported a post-Lehman low unemployment rate of just 3.4%, in fact in Japan this was  the lowest print since 1997. As the following employment indicators suggest, the Japanese labor market should be tighter than at any point in the 21st century, suggesting wage inflation should be rampant:

In the US the most recent unemployment rate was 5.4%, about as close to full employment as possible, and yet neither in Japan nor in the US has there been any wage improvement.

So how does one explain the paradox of a labor market that at least quantitatively has no further slack and yet where real wage growth has never been lower. Simple, and incidentally the explanation is one which Zero Hedge provided all the way back in 2010 when we charted “America’s Transformation To A Part-Time Worker Society.”

It turns out that in Japan the answer is the same, only when one peeks beyond the merely quantitative and into the qualitative, it is worse. Much, much worse. As the following chart shows, virtually all the job growth in Japan since the great financial crisis has been thanks to part-time jobs!

This is Goldman’s explanation which comes 5 years after our own: