Japan real wages fall in Nov, a worrying sign for private consumption

[TOKYO] Japanese wages dropped in November for the first time in nearly a year on an annual and inflation-adjusted basis, government data showed on Friday, a development likely to crimp private consumption.

The decline was partly due to a fall in bonus payments in November, and government officials said it reflected increases in prices.

The data came out one day after Prime Minister Shinzo Abe urged business leaders to support a sustainable economic recovery by raising employee wages in the new year.

But the data underscored that despite the tight job market and high corporate profits, it remains a struggle to accelerate wage growth.

With inflation weakening, the coming spring wage negotiations between labour unions and management are likely to result in moderate wage hikes in line with last year, economists say.

The labour ministry data showed inflation-adjusted real wages dropped 0.2 per cent in November from a year earlier, after a flat reading in October.

A ministry official, noting increases in nominal cash earnings and regular pay, said "wages are rising moderately as a trend".

Wage earners' nominal cash earnings rose 0.2 per cent year-on-year in November, following a 0.1 per cent gain in October.

Special payments - including workers' winter bonus payments, which are paid in November through January - fell 3.4 per cent.

Regular pay, which accounts for the bulk of total pay and determines base salaries, increased an annual 0.4 per cent, rising for a fifth straight month.

But overtime pay, a barometer of strength in corporate activity, fell 1.3 per cent in November from a year ago, down for a sixth consecutive month.

REUTERS