Japan's real wages fall for 4th month despite pay growth

January 09, 2025 (MLN): Japan's inflation-adjusted real wages declined for the fourth consecutive month in November, pressured by higher prices.

This occurred despite base pay growing at the fastest pace in over three decades, according to government data released on Thursday.

The Bank of Japan (BOJ) considers various risks when determining the timing for raising interest rates, as Reuters reported.

The central bank has repeatedly stated that sustained, broad-based wage hikes are a prerequisite for increasing borrowing costs.

Inflation-adjusted real wages, a barometer of consumer purchasing power, slipped 0.3% in November from a year earlier, falling for the fourth straight month, data from the labor ministry showed.

It revised October's unchanged reading to a 0.4% decline.

The consumer inflation rate used to calculate real wages, which includes fresh food prices but excludes rent or equivalent, rose 3.4% from a year earlier.

This marked an acceleration from the 2.6% growth in October, reflecting increased inflationary pressure.

Base salary, or regular pay, rose 2.7% in November, marking the fastest increase since 1992, the data showed after major companies agreed to higher pay at the spring wage negotiations.

Overtime pay, a barometer of business strength, grew 1.6% for the month from a revised 0.7% gain in October.

Special payments, mainly volatile one-off bonuses, climbed 7.9% in November, after a revised 2.2% fall in October.

Total cash earnings, or nominal pay, grew 3.0% to 305,832¥ ($1,935.03) for the month, the data showed.

Large Japanese firms are expected to raise wages by about 5% in 2025, matching the increase from last year.

The chair of a major business lobby made this statement on Tuesday, also pledging efforts to extend the wage growth momentum to smaller firms.

The government of Prime Minister Shigeru Ishiba has put pay rises at the top of its public policy agenda with Ishiba promising to push for wage growth at this year's spring negotiations.

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