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By Kantaro Komiya and Tetsushi Kajimoto
TOKYO, March 7 (Reuters) - Japan's real wages fell the
most in nearly nine years in January, official data showed, as
four-decade-high inflation squeezed the purchasing power of
consumers and undercut efforts by policymakers to revive a
COVID-ravaged economy.
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 its loose monetary policy.
The central bank is set to maintain its ultra-low interest
rates at a policy review on Friday, as it awaits a leadership
transition that could eventually end outgoing head Haruhiko
Kuroda's radical stimulus. 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, labour ministry data showed
on Tuesday. It followed a revised 0.6% drop in December.
"Real wages have probably hit the bottom in January as
government subsidies on electricity and gas charges have taken
effect in February and base effects of commodity price hikes
have run their course," said Azusa Kato, senior economist at BNP
Paribas Securities.
"Given that wage hikes are gathering momentum towards the
annual labour negotiations this month, the Bank of Japan will
come under pressure to tweak its yield curve control as early as
this week. Even if it stands pat, it will stay under pressure."
The fall in real wages comes as major Japanese firms
including Toyota, Nintendo and Fast Retailing pay heed to
policymakers' calls and union demands by announcing plans for
historic pay rises.
Japan's economy averted recession in the fourth quarter but
rebounded much less than expected, delaying a recovery from the
scars of the COVID-19 pandemic.
Total cash earnings, or nominal wages, posted a 0.8%
year-on-year gain in January, the data showed, much weaker than
a revised 4.1% growth in December, when strong one-off winter
bonuses drove up overall salaries.
The feeble nominal growth in wages in January was well short
of the 5.1% consumer inflation rate used to calculate pay in
real terms. The inflation rate excludes owners' equivalent rent.
Currently, Japan's core consumer inflation, which excludes
volatile fresh food prices but includes oil products, is running
at 4.2%, 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
----------------------------------------------------------------
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
----------------------------------------------------------------
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)
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Japan's real wages drop at fastest pace since 2014 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Kantaro Komiya and Tetsushi Kajimoto; Graphics by
Pasit Kongkunakornkul; Editing by Alexander Smith)
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