TOKYO- Japan’s wages rose in April as major companies lifted pay at the fastest pace in three decades on workers’ increased demands for salaries to keep up with inflation, but households’ spending remained weak and underlined a patchy economic recovery.
The April wage data provides an early glimpse of the effects of the spring labor negotiations, or “shunto”, and comes as Bank of Japan Governor Kazuo Ueda has said an end to easy policy would depend on the economy achieving sustainable 2 percent inflation along with wage hikes.
“While we must wait until May to see the full picture of the shunto results, April’s growth wasn’t as strong as expected,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Total cash earnings, or nominal wages, grew 1.0 percent in April from a year earlier, the labor ministry data showed. The growth was smaller than a revised 1.3 percent rise logged in March.
The majority of local firms review their wages in April at the onset of a new Japanese fiscal year, but the shunto’s gains take a few months to fully filter through to official statistics.
Regular or base salary rose 1.1 percent in April, the fastest in four months, while overtime pay fell 0.3 percent for its first decrease in more than two years, the data showed.
Inflation-adjusted real wages fell 3.0 percent, marking the 13th straight month of year-on-year declines, as persistently high consumer inflation outstrips nominal pay growth and squeezes households’ buying power.
Japan’s salary data is keenly watched by markets because policymakers regard wage-driven economic growth as their central objective.
Major firms concluded wage hikes of 3.66 percent at shunto this year, the largest since 1993, according to the national labor organization Rengo’s latest survey. Rising inflation and shrinking workforce are prodding smaller firms to follow a similar path.
