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Real wages in Japan fall 1.8% year on year in April
Real wages in Japan declined for a fourth straight month in April, according to data from the labor ministry released Thursday, as pay increases continued to fall short of price rises.
On an inflation-adjusted basis, wages were down 1.8% in April year on year, with the inflation figure used for the calculation that month set at 4.1%.
Rising food prices have hit households hard, especially those for rice, which were up 98.4% year on year in April.
Economists say that food inflation will likely fall in the coming months, while a strengthening of the yen will bring down import costs, meaning that the inflation part of the equation should start to fall.
'Going forward, wage growth is expected to moderately accelerate, as the wage hike from this year's spring offensive will gradually be reflected,' Takahide Kiuchi, executive economist at Nomura Research Institute, wrote in a report on Thursday.
'As a result, the rate of year-on-year decline in real wages is projected to shrink. However, it might not turn positive until closer to the end of this year.'
Overall nominal wages, including those for part-timers, rose 2.3% in April to ¥302,453 — the 40th straight increase — while base salaries rose 2.2% to ¥269,325 — the 42nd straight increase.
Analysts are paying particular attention to the growth of base salaries, since the pace of the increase fell in February and March.
Some economists believe that the slowdown of year-on-year growth in base salaries in February and March had to do with the fact that last year was a leap year, which resulted in additional working hours. Some companies reflect February working hours in March pay, so it affected the March figure too.
When looking at data from companies that were also sampled last year, base salary growth seems to have picked up in April, with a year-on-year rate of 2.5%, compared with February's 2% and March's 2.1%.
Koichi Fujishiro, an economist at Dai-ichi Life Research Institute, wrote in a report Thursday that the 2.5% growth in April is still unconvincing and does not definitively indicate a strong trend.
'We probably need to keep in mind the suspicion that the underlying wage growth rate may be actually slowing,' he said.
