Japan June real wages down for 15th month despite solid nominal growth

TOKYO (Reuters) – Japanese real wages fell for a 15th straight month in June on relentless price hikes, but nominal pay growth remained robust amid rising salaries for high-income workers and a broadening labour crunch.

Japan’s wage trends receive an unusual amount of attention from global financial markets as the Bank of Japan emphasises sustainable pay hikes amid four-decade-high inflation as a prerequisite for dismantling its massive monetary stimulus.

Inflation-adjusted real wages, a barometer of consumers’ purchasing power, fell 1.6% from a year earlier, a faster decrease than May’s 0.9% drop, extending a streak of contractions since April 2022.

That was because a 2.3% increase in total cash earnings, or nominal wages, was far outpaced by 3.9% consumer price inflation under a measure the ministry uses that excludes owners’ equivalent rent.

Nominal pay growth in June was lower than a revised 2.9% rise in May, the fastest growth in nearly three decades thanks to solid jump in base salaries.

June’s base annual salary increase was 1.4%, also smaller than May’s 1.7%, but still higher than recent trend. Japan’s average base salary growth rate in 2022 was 1.1%.

Workers at major Japanese companies saw an almost 4% wage hike this year, according to a survey by elite business lobby Keidanren, while the country’s National Personnel Authority on Monday advised the central government to hike its workers’ base pay 10 times more than the average in the previous five years.

There are signs of broadening wage hikes. A government panel last month approved the biggest-ever increase in the national minimum wage. A July survey by research firm Teikoku Databank showed on Monday that 51.4% of companies across Japan were experiencing a shortage of regular workers, near the historical high of 53.9% seen in November 2018.

Overtime pay, a gauge of business activity strength, rose 2.3% in June, the fastest in six months, health ministry data showed.

Special payments rose 3.5% in June, after revised 35.9% gain in the previous month, although the indicator tends to be volatile in months outside the twice-a-year bonus seasons of November to January and June to August.

The table below shows preliminary data for monthly incomes and number of workers in June:

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Payments (amount) (yr/yr % change)

Total cash earnings 462,040 yen ($3,249) +2.3

-Monthly wage 272,228 yen +1.5

-Regular pay 253,554 yen +1.4

-Overtime pay 18,674 yen +2.3

-Special payments 189,812 yen +3.5

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Number of workers (million) (yr/yr % change)

Overall 52.416 +1.8

-General employees 35.707 +1.2

-Part-time employees 16.709 +2.9

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The labour ministry defines “workers” as 1) those employed for more than one month at a company that employed more than five people, or 2) those employed on a daily basis or had less than a one-month contract but had worked more than 18 days during the two months before the survey was conducted, at a company that employs more than five people.

To view the full tables, see the labour ministry’s website at:

($1 = 142.2100 yen)

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