TOKYO (Reuters) – Japan’s real wages saw their biggest fall in nearly nine years in January due to four-decade-high inflation, labour ministry data showed on Tuesday, squeezing the buying power of consumers.
Wage trends in the world’s third-largest economy are under close market scrutiny because Bank of Japan officials have said that pay hikes, combined with 2% inflation, are essential to it scaling back ultra-loose monetary policy.
The fall in real wages comes despite major Japanese firms including Toyota, Nintendo and Fast Retailing paying heed to policymakers’ calls and union demands by announcing plans for historic pay rises.
Inflation-adjusted real wages, a barometer of households’ purchasing power, fell by 4.1% in January from a year earlier, the largest decrease since May 2014. It followed a revised 0.6% drop in December.
Total cash earnings, or nominal wages, posted a 0.8% year-on-year gain in January, much weaker than a revised 4.1% growth in December, when strong one-off winter bonuses drove up overall salaries.
The feeble nominal pay growth fell short of the 5.1% consumer inflation rate used to calculate pay in real terms, which includes fresh foods but excludes owners’ equivalent rent. It was running at the fastest pace since 1981.
Overtime pay, a gauge of business activity strength, rose 1.1% year-on-year in January, its weakest growth in 22 months.
Special payments fell by 1.7% in January, after a revised 6.5% growth in the previous month. The indicator tends to be volatile on months other than the bi-annual bonus seasons of November to January and June to August.
The following table shows preliminary data for monthly incomes and number of workers in January:
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Payments (amount) (yr/yr % change)
Total cash earnings 276,857 yen ($2,035) +0.8
-Monthly wage 265,800 yen +0.8
-Regular pay 247,153 yen +0.8
-Overtime pay 18,647 yen +1.1
-Special payments 11,057 yen -1.7
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Number of workers (million) (yr/yr % change)
Overall 51.693 +1.6
-General employees 35.222 +0.9
-Part-time employees 16.471 +3.0
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The 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 = 136.0100 yen)
(Reporting by Kantaro Komiya; Editing by Alexander Smith)
