Japan’s real wages pose threat to demand

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    Decline. A file photo of workers seen at an assembly line of Honda Motor Co.’s motorcycles at Honda’s Kumamoto factory in Ozu town, Kumamoto prefecture, Japan. Labor ministry data showed real wages, a gauge of household purchasing power, fell 0.9 percent in November from November a year ago, their fastest decline since July. They also were revised down to a 0.4 percent contraction in October. (Reuters Photo)
    Decline. A file photo of workers seen at an assembly line of Honda Motor Co.’s motorcycles at Honda’s Kumamoto factory in Ozu town, Kumamoto prefecture, Japan. Labor ministry data showed real wages, a gauge of household purchasing power, fell 0.9 percent in November from November a year ago, their fastest decline since July. They also were revised down to a 0.4 percent contraction in October. (Reuters Photo)

    TOKYO- Japan’s inflation-adjusted real wages declined at their fastest pace in four months in November, government data showed on Wednesday, clouding the outlook for an economy already under pressure from a nationwide tax increase.

    Japan’s economy has suffered in recent months from soft global demand and a slide in consumer spending, after the government raised sales tax to 10 percent from 8 percent in October.

    Labor ministry data showed real wages, a gauge of household purchasing power, fell 0.9 percent in November from November a year ago, their fastest decline since July. They also were revised down to a 0.4 percent contraction in October.

    Nominal total cash earnings fell 0.2 percent in November from a year earlier, their first decline in three months. Their 0.5 percent gains in October were revised down to no change.

    “The fall in real wages was larger in November due to the impact from a rise in the consumer price index,” a labor ministry official told Reuters, adding that fresh food prices increased.

    One-off special payments slumped 3.9 percent in November after a revised 8.5 percent drop in October. Regular pay – or base salary, which makes up most of total cash earnings and determines a wage trend – inched up 0.1 percent, according to the data.

    Overtime pay, a barometer of strength in corporate activity, declined 1.9 percent in November from a year earlier, after it was revised down to a 0.1 percent fall in October.

    Those figures particularly show reduced overtime hours among manufacturers, the official said.

    Revelations last year that labor ministry officials used faulty polling methods, which forced revisions, cast doubt on the accuracy of the ministry’s wage data from 2004 to 2017. The flaw has made it harder to gauge the actual wage trend. – Reuters