Japan's Dec real wages post biggest monthly fall since May 2020

[TOKYO] Japan's real wages posted the largest drop in more than 18 months in December, the government said on Tuesday, as global inflationary pressures and a rise in part-time workers hurt households' purchasing power.

The world's third-largest economy has struggled to achieve a substantial improvement in wages for years, undermining its ability to achieve solid economic growth as it also faces a rapidly ageing population.

Inflation-adjusted real wages, a key gauge of households' purchasing power, slumped 2.2 per cent year-on-year in December, the biggest drop since a 2.3 per cent fall in May 2020, data from the labour ministry showed.

For the whole of 2021, real wages were flat, snapping two years of declines after a 1.2 per cent fall in 2020 and a 1.0 per cent drop in 2019, according to the data.

The drop in the monthly data was mainly due to a jump in a consumer price index that the labour ministry uses to calculate real wages, which gained 2.0 per cent in December, as well as an increase in part-timer workers.

"The overall wage average declined because of a rise in the share of people working shorter hours," said an official at the labour ministry.

Nominal total cash earnings slipped 0.2 per cent in December, posting their first fall in 10 months, after a revised 0.8 per cent gain in November, while regular pay was up 0.2 per cent, the data showed.

Overtime pay, a barometer of strength in corporate activity, rose 4.8 per cent in December from the same period a year earlier, rising for the ninth straight month.

Special payments, which include the discretionary winter bonuses that firms will slash when they face headwinds, lost 0.9 per cent in December after a revised 6.9 per cent increase in November. REUTERS