TOKYO – Japanese real wages continued to decline in June, marking the 15th consecutive month of decrease due to rising prices. However, nominal pay growth remained strong, driven by higher salaries for high-income workers and a tightening labor market.
Japan’s wage trends are closely monitored by global financial markets, as the Bank of Japan sees sustainable pay increases as a key requirement for gradually reducing its massive monetary stimulus in the face of high inflation.
In June, inflation-adjusted real wages fell by 1.6% compared to the previous year, a larger decrease than May’s 0.9% decline. This extends the streak of declines that began in April 2022. The decrease can be attributed to a 2.3% increase in nominal wages, which was overshadowed by a 3.9% rise in consumer prices (excluding owners’ equivalent rent).
Although the nominal pay growth in June was lower than the 2.9% increase in May, which was the highest in nearly three decades, there was still a solid increase in base salaries. The annual base salary increase in June was 1.4%, slightly smaller than May’s 1.7%, but higher than the average base salary growth rate of 1.1% in 2022.
A survey by elite business lobby Keidanren revealed that workers at major Japanese companies saw a nearly 4% wage hike this year, while the country’s National Personnel Authority recommended a 10-fold increase in the central government’s base pay compared to the average of the previous five years.
There are signs of broader wage increases, as a government panel recently approved the largest-ever increase in the national minimum wage. Additionally, a July survey by research firm Teikoku Databank showed that 51.4% of companies in Japan are facing a shortage of regular workers, nearing the historical high of 53.9% seen in November 2018.
June also saw a 2.3% increase in overtime pay, indicating strength in business activity. Special payments rose by 3.5% in the same month, following a revised 35.9% gain in the previous month, although this indicator tends to be volatile outside of the twice-a-year bonus seasons.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
