Japan real wages down 25th straight month in April, government says

06/04/2024

1 minute read

2024.06.04 20:04

TOKYO (Reuters) – Japan’s inflation-adjusted real wages fell again in April from a year earlier, extending a record streak of declines for the 25th month, as higher costs of living outweighed pay raises, data from the labour ministry showed on Wednesday.

Real wages fell 0.7% year-on-year in April, a slower pace of decline from the preceding month’s 2.1% drop.

The previous record was a 23rd straight run of declines in real wages from 2007 to 2009 during the global financial crisis, which had led to millions of job losses.

This time, stubborn inflation was to blame for sliding real wages, with consumer inflation of 2.9% outpacing nominal wages.

On the brighter side, scheduled cash earnings, or regular pay, rose 2.3% year-on-year in April, matching the previous high seen in October 1994, shortly after the asset bubble burst.

The latest hike in base pay reflects the hefty increases agreed by labour and management at annual labour negotiations since last year, a ministry official said.

This year, major Japanese firms have offered more than 5% increase in workers’ monthly pay, a level unseen in about three decades.

Japan is seeing early signs of achieving a positive cycle of rising wages and inflation.

Workers’ earnings, however, are still lagging behind rising costs, underscoring the challenges policymakers face in getting companies to bring real wages into positive territories.

Some economists expect real wages to turn positive at some point in the 2024/25 fiscal year. However, uncertainty over the estimate remains high.

Nominal wages, or an average total cash earnings per worker, grew 2.1% to 296,884 yen ($1,913.28), accelerating from the previous month’s 1.0% and posting the highest pace in 10 months.