TOKYO: Japan’s regular pay grew at the fastest pace in over 28 years in May, government data showed on Friday (Jul 7), as wage hikes induced by labour talks this spring started to take effect.
Base salary soared 1.8 per cent in May year-on-year, the biggest rise since February 1995.
Wage growth is one of the key trends on the Bank of Japan’s(BOJ) radar as the central bank considers if and when it should unwind its ultra-loose monetary stimulus.
BOJ Governor Kazuo Ueda has repeatedly stressed the need to keep policy accommodative until wages increase enough to keep price growth sustainably around its 2 per cent target.
The country’s largest trade union group Rengo said on Wednesday its member unions saw the biggest pay increase in three decades, with an average hike of 3.58 per cent, at this year’s salary negotiations.
The results from the labour talks will be reflected toward the summer, labour ministry officials said.
Total cash earnings, or nominal wages, increased 2.5 per cent year-on-year in May, after rising a revised 0.8 per cent in April.
The consumer price index the ministry uses to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, grew but at a slower pace of 3.8 per cent gain in May from a 4.1 per cent jump in April.
Inflation-adjusted real wages, a barometer of households’ purchasing power, dropped 1.2 per cent in May from a year earlier, falling for 14 months straight.
Special payments jumped 22.2 per cent in May, after a revised 0.7 per cent gain in April. The indicator tends to be volatile in months outside the twice-a-year bonus seasons of November to January and June to August.
Overtime pay, a gauge of business activity, edged up 0.4 per cent in May from a year earlier, compared with a revised 0.7 per cent drop in April.
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