Japan’s inflation-adjusted wages slip in September for 18th month
A woman points at the high prices of fruits at a market in Tokyo, Japan March 3, 2023. REUTERS/Androniki Christodoulou/File photo
TOKYO -Japan’s real wages slipped in September for an 18th month, while consumer spending extended a months-long decline, with rising prices squeezing households’ purchasing power, and likely to add to pressure from labor groups for higher wage increases.
Financial markets worldwide pay close attention to the wage trends in the world’s third-largest economy. The Bank of Japan regards sustainable pay increases as important for unwinding its ultra-loose monetary stimulus.
Inflation-adjusted real wages, a barometer of consumer purchasing power, dropped in September by 2.4 percent from a year earlier after a revised 2.8 percent fall the month before, data from the Ministry of Health, Labor and Welfare showed.
The consumer inflation rate officials use to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, slowed to 3.6 percent, the lowest since September last year.
Still, nominal pay growth in September was 1.2 percent, after a downward revision of 0.8 percent in August and only slightly better than in July.
Japan’s largest labor organization Rengo is expected to demand pay increases of 5 percent or more, while the largest industrial union, UA Zensen, will seek a 6 percent wage increase in negotiations early next year.
Prime Minister Fumio Kishida’s government last week drew up a 17 trillion yen ($113.72 billion) economic stimulus package that includes slashing annual income tax and other taxes by 40,000 yen ($267.58) per person and paying 70,000 yen to low-income households.
READ: Japan cabinet approves spending package to ease inflation pain
Special payments fell 6 percent year-on-year in September after a revised 6.3 percent decline in August. The indicator tends to be volatile in months outside the twice-a-year bonus seasons of November and January and June to August.
Base salary growth in September advanced by 1.4 percent year-on-year, from a revised 1.2 percent increase the previous month, the data showed.
Overtime pay, a gauge of business activity, went up in September by 0.7 percent year-on-year, after a revised 0.2 percent gain in August.
READ: Japan must focus on wage growth ahead of inflation – BOJ’s Noguchi
Sluggish spending
Household spending decreased 2.8 percent in September from a year earlier, falling for seven months in a row, separate data on Tuesday showed, roughly in line with the median market forecast for a 2.7 percent decline.
On a seasonally adjusted, month-on-month basis, household spending climbed 0.3 percent, versus an estimated 0.4 percent fall.
Expenses in eating out, transportation and automobile-related spending went up due to an increase in outings, while spending on food, housing, furniture and household goods decreased partly due to rising prices, a government official said.
Major companies agreed to average pay hikes of 3.58 percent this year, the highest increase in 30 years. Average Japanese workers’ wages had remained virtually flat since the asset-bubble burst in the early 1990s until this year.
