Japan real wages positive for the first time in 2 yrs

[TOKYO] Japan's inflation-adjusted real wages in April turned positive for the first time in two years, government data showed, adding steam to Tokyo's hope that higher pay will spur consumer spending and nudge up inflation.

The labour ministry data showed that inflation-adjusted real wages rose 0.1 per cent, marking the first increase since April, 2013 when real wages rose by 0.4 per cent. Wage earners' total cash earnings also rose 0.9 per cent year-on-year in April to 274,577 yen (US$2,213.44).

Regular pay jumped by 0.6 per cent in April from a year earlier, the biggest percentage increase since Nov 2005.

Real wages picked up as the impact of last year's sales tax hike faded and workers enjoyed an overall wage increase and larger-than-expected bonuses, a labour ministry official said.

The data provides a victory for Prime Minister Shinzo Abe's reflationary policies under which the government has been pressuring Japanese firms to raise wages, a step seen as essential to generating a virtuous growth cycle of higher wages and consumer spending leading to higher corporate profits, investment and employment.

Japanese blue-chip firms announced wage hikes that topped last year's increases this year, but overall pay raises across corporate Japan are not expected to offset higher costs of living.

Overtime pay, a barometer of strength in corporate activity, still fell 2.3 per cent in April from a year earlier, the labour ministry said.

In April, the Bank of Japan pushed back the timeframe for achieving its ambitious price goal but held off from expanding its already massive stimulus programme.

REUTERS