Japan’s December inflation-adjusted real wages rose 0.6% year-on-year thanks to a wintertime bonus bump, preliminary government data showed on Wednesday, with government officials expressing optimism that wage hike momentum ahead is growing.
Prime Minister Shigeru Ishiba sees strong wage growth as key to supporting a fragile economic recovery, while the Bank of Japan has said sustained, broad-based wage hikes are a prerequisite for pushing up borrowing costs.
December’s real wages, a barometer of consumer purchasing power, grew 0.6% in December from a year earlier, data from the labour ministry showed. The inflation-adjusted wages rose for the second consecutive month after the ministry revised up November’s figure to a 0.5% uptick from a 0.3% drop.
The positive figure is attributed to a 6.8% jump in special payments, mainly on companies’ wintertime bonuses, the ministry said. Such a bump pushed total cash earnings, or nominal pay, up to 619,580 yen ($3,991.11), a 4.8% increase year-on-year.
The consumer inflation rate that the government uses to calculate real wages and includes fresh food prices but not rent or equivalent, climbed 4.2%, accelerating from November’s 3.4% and rising at the fastest pace since January 2023.
“Although monthly wages and base salary have been rising compared to the past, they are not keeping up with prices,” a labour ministry official said.
Regular pay, or base salary, rose 2.7% in December from a year ago after a revised 2.5% gain in November, the data showed. Overtime pay, a barometer of business strength, grew 1.3% for the month from a revised 1.4% growth in November.
In separate wage data for the whole of 2024, the overall base salary grew at the fastest pace in three decades, while special payments rose at the fastest pace since 2001, according to the ministry.
Real wages for that year as a whole, though, dipped 0.2% compared to 2023, down for the third consecutive year as consumer inflation exceeded 3% and outpaced nominal pay.
Still, a separate labour ministry official said regular pay has risen and special payments helped real wages turn positive during bonus seasons last year.
“If this trend continues, or if consumer inflation cools down, we can expect a positive trend in real wages” looking ahead, the official said.
Japanese companies agreed to an average 5.1% wage hike in 2024, the biggest increase in three decades, according to Rengo, the nation’s largest union.
Rengo is seeking wage hikes of at least 5% in 2025, while setting a target of at least 6% for smaller firms to narrow the income gap with workers at large firms.
($1 = 155.2400 yen)
(Reporting by Satoshi Sugiyama; Editing by Raju Gopalakrishnan)
