TOKYO- Japanese workers saw their average base pay climb 2.5 percent in May – the fastest pace in 31 years as bumper pay hikes offered by companies in annual wage negotiations took effect, while part-time workers notched up some particularly strong gains.
But inflation-adjusted real wages fell for a record 26th straight month as a weakening yen and higher commodity prices pushed up the cost of imports, complicating the Bank of Japan’s (BOJ) efforts to normalize monetary policy.
Wages hold the key to how soon the central bank could raise interest rates. BOJ Governor Kazuo Ueda has said broad-based increases in pay must accompany rising prices for inflation to durably meet the bank’s 2 percent target.
The 2.5 percent gain in May from a year earlier was bigger than a revised 1.6 percent increase in April and marked the fastest pace since January 1993, around the time when Japan’s asset bubble burst.
“The data highlights Japan’s increasing wage momentum. While real wages continue to fall, they will likely start rising in July,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities.
Nominal wages, or the average total cash earnings per worker, grew 1.9 percent to 297,151 yen ($1,850), accelerating from the previous month’s 1.6 percent gain to mark the highest year-on-year increase in 11 months.
But when adjusted for inflation, wages fell 1.4 percent in May after a revised 1.2 percent decline in April.
There were signs that Japan’s intensifying labor shortage is leading to broader-based wage rises. Wage hikes at firms with 30 or more employees outpaced inflation for the first time in 26 months, though when very small firms with five or more workers were included, pay hikes still lagged inflation.
Hourly pay for part-time workers rose 4.0 percent in May from a year earlier, outpacing a 2.7 percent gain for full-time staff.
In one example of robust gains for part-time workers, the Hotel Mercure in Sapporo has raised its hourly pay for part-time workers by 15 percent on average this year, more than a 4 percent increase for its full-time workers.
“At this time of labor shortages, we need to offer high wages to attract part-time workers,” said Kiyohiko Bando, manager at the hotel.
Tomomi Otake, who is now working part-time at the hotel, said she was motivated to rejoin the workforce after five years because of the attractive pay, flexible shifts and the need to fund her children’s education.
