Japan’s real wages fall at fastest pace in over 8 years in November, undercut by inflation


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Japan’s real wages in November fell 3.8% from a year

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earlier, their fastest rate in more than eight years, as

inflation undercut workers’ pay, dealing a blow to policymakers’

hopes of achieving faster economic growth led by higher wages.

Adding to the gloom, nominal annual pay growth slowed

markedly in November, even though wages were up for an 11th

straight month, official data showed on Friday, reflecting slow

recovery from COVID-induced doldrums.

Growth in real wages – nominal wage growth adjusted for

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inflation – is a key indicator of consumer purchasing power.

The data underscored the challenge for Prime Minister

Fumio Kishida’s government in seeking faster wage hikes that

outpace rising inflation, encourage spending and stimulate the

economy. The objective is the focus of the upcoming annual

“shunto” labor-management talks to be concluded in mid-March.

With record profits, Japanese firms have piled up

internal cash and other reserves that by September were worth

500 trillion yen ($3.7 trillion). The companies are expected to

offer pay rises of around 2.7%, versus the previous year’s


That would fall far short of the 5% demanded by the

Japanese Trade Union Confederation, known as Rengo, and would

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not match core consumer inflation, which is at a more than

four-decade high.

Sluggish wage recovery remains a pressing issue for

Japan as surging living costs hurt households and weigh on

consumer spending in the economy, the world’s third largest.

Kishida this week urged firms to accelerate wage hikes that

exceed the rate of inflation to prevent stagflation.

November’s 3.8% annual fall in inflation-adjusted real

wages was the greatest since a 4.1% drop in May 2014, when they

had been affected by rises in sales tax, the labor ministry


The consumer price index that the ministry uses to calculate

real wages, which includes fresh food but not the rent value of

owner-occupied homes, was 4.5% higher in November that a year

earlier, the quickest pace of increase since June 1981.

Nominal total cash earnings were up an annual 0.5% in

November, but the pace of growth slowed from a revised 1.4% gain

seen in October, led by falls in special payments such as


($1 = 133.6 yen)

(Reporting by Kaori Kaneko and Tetsushi Kajimoto; Editing by

Mark Heinrich and Bradley Perrett)


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