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Japan real wages post biggest gain since 2010 in March: govt

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Japanese price-adjusted real wages in March rose the most in 5-1/2 years due to stalling inflation and rising nominal wages, government data showed on Monday, providing welcome news for policymakers counting on pay rises to spur private consumption.

[TOKYO] Japanese price-adjusted real wages in March rose the most in 5-1/2 years due to stalling inflation and rising nominal wages, government data showed on Monday, providing welcome news for policymakers counting on pay rises to spur private consumption.

Wage growth holds the key to the success of Prime Minister Shinzo Abe's Abenomics reflationary policy aimed at pulling the world's third-largest economy out of two decades of deflation and stagnation by generating private sector-led growth.

Real wages, adjusted for inflation, rose 1.4 per cent in March from a year earlier, the biggest gain since September 2010, data by the labour ministry showed.

It was the second straight month of annual gains, which should ease policymakers' concerns about tepid wages that lag behind price increases eroding consumers' purchasing power.

Wage earners' nominal cash earnings also rose 1.4 per cent in March, to 278,501 yen (S$3,545), up two months in a row and posting the biggest gain since July 2014, the data showed.

"Wages are increasing gradually as a trend, and they grew more than expected in March due to bonus payments and steady increase in regular pay," a ministry official said.

Regular pay, which determines base salaries, rose an annual 0.4 per cent, while overtime pay - a barometer of strength in corporate activity - fell 0.2 per cent in March, the data showed.

Special payments grew 19.8 per cent as more firms pay bonuses in March. Because special payments are generally small, even a slight change in the amount can cause big percentage changes, the official said.

REUTERS