Japan's April real wage gains slow in warning sign for economy

[TOKYO] Japanese price-adjusted real wages in April rose less than in the previous month, government data showed on Friday, in a worrying sign that upward pressure on pay rises may be waning.

Wage growth is crucial to the government's efforts to spur private consumption and defeat deflation.

Prime Minister Shinzo Abe has repeatedly urged companies to increase worker compensation to boost consumption - key to ending two decades of deflation and stagnation - but tepid pay rises may make households more cautious about spending.

Real wages, adjusted for inflation, rose 0.6 per cent in April from a year earlier, less than a revised 1.6 per cent annual increase in March, data by the labour ministry showed. Previous data showed real wages rose 1.4 per cent year-on-year in March.

Wage earners' nominal cash earnings rose 0.3 per cent in April to 274,984 yen (S$3,471), up three months in a row but lagging behind a revised 1.5 per cent annual increase in March, the data showed. Previous data showed nominal cash earnings rose an annual 1.4 per cent in March.

Regular pay, which determines base salaries, rose an annual 0.2 per cent, while overtime pay - a barometer of strength in corporate activity - rose 1.0 per cent in April, the data showed.

Special payments grew 4.3 per cent in April, compared with a revised 15.4 per cent gain in March. Because special payments are generally small, even a slight change in the amount can cause big percentage changes.

REUTERS