Japan real wages continue to fall in May despite tight job market

[TOKYO] Japan's inflation-adjusted real wages slid in May from a year earlier despite a tightening job market to register a 25th straight month of decline, according to data released on Tuesday.

The data highlights the challenge policymakers face in generating a virtuous cycle, under which rising revenues prompt companies to boost wages so that households increase spending.

Total cash earnings rose 0.6 per cent in the year to May, increasing for a second straight month, with regular pay up 0.3 per cent, labour ministry data showed.

But inflation-adjusted real wages fell 0.1 per cent in May after a revised decline by the same margin in April, the data showed, suggesting that consumer spending will remain weak.

The jobless rate was steady at an 18-year low of 3.3 per cent and job availability hit a two-decade high in May, reflecting a steady economic recovery.

But companies, particularly small firms, remain hesitant to raise wages for fear of permanent rises in costs, keeping the rebound in consumption moderate.

Overtime pay, a barometer of strength in corporate activity, also fell 1.6 per cent to mark the third straight month of declines.

REUTERS