Japan real wages fall in January for 22nd month, down 0.6% on yr

TOKYO (Kyodo) — Japan’s real wages in January were down 0.6 percent from a year earlier, marking the 22nd straight month of decline, as salary gains continued to fall short of price rises, government data showed Thursday.

Wages adjusted for inflation logged their smallest decline in 13 months, amid expectations for inflation-beating pay rises at this year’s “shunto” spring wage negotiations.

Nominal wages, the average total monthly cash earnings per worker including base and overtime pay, climbed 2.0 percent to 282,270 yen, ($1,900), up for the 25th straight month, according to the Ministry of Health, Labor and Welfare.

The limited fall in real wages came after Japan’s consumer price index for January showed core inflation had decelerated to 2.0 percent, its slowest increase in almost two years, in a sign that the impact of the yen’s weakness on prices is dissipating.

Average base pay and other scheduled wages rose 1.3 percent to 269,359 yen, while overtime pay and other nonscheduled wages were up 0.4 percent at 18,604 yen, the data showed.

The highest increase in monthly earnings was recorded in the electricity and gas sector, up 9.6 percent from a year earlier, followed by 4.8 percent in information and communications and 4.7 percent in finance and insurance.

Monthly pay in the mining and quarrying sector was down 2.3 percent.

The average monthly nominal wages of full-time workers rose 2.3 percent to 369,239 yen, while those of part-time workers increased 2.2 percent to 101,358 yen.

Total working hours per worker fell 0.6 percent from a year earlier to 127.1.

Rising real wages are seen as key to breaking Japan’s deflationary malaise and the results of the spring wage negotiations will provide a major indicator of whether a cycle of pay increases above inflation is likely to be established.

The Japan Business Federation, the country’s most powerful business lobby known as Keidanren, is calling on members to offer pay rises in excess of the average 3.99 percent increase in 2023, which marked a 31-year high.

The Japanese Trade Union Confederation, or Rengo, says it aims to negotiate pay hikes of 5 percent or higher.

While some major companies have announced big increases, with automaker Honda Motor Co. agreeing to a 5.6 percent annual pay hike, it remains uncertain whether medium-sized and small businesses, which employ around 70 percent of the country’s workforce, will boost wages.