Real Wages Drop in March for Record 24th Straight Month; 2.5％ Decline Attributed to Higher Consumer Price Index

The Yomiuri Shimbun

15:16 JST, May 9, 2024

Japan’s real wage index fell 2.5% in March from a year earlier, marking the 24th straight month of decline — the longest such streak on record — according to preliminary data released by the Health, Labor and Welfare Ministry on Thursday.

Although total nominal wages increased, inflation continued to outpace wage growth.

The decline in real wages, in which prices of goods and services have been taken into account, was attributed to the 3.1% increase in the consumer price index, which is used to calculate real wages. The next-longest streak since statistics began in 1991 is the 23 consecutive months of year-on-year decline from September 2007 to July 2009, a period that included the collapse of U.S. investment bank Lehman Brothers.

The drop in real wages in March was also larger than the 1.8% fall in February.

Monthly nominal wages per worker rose 0.6% to ¥301,193 on average. Special pay, such as bonuses, fell 9.4% to ¥21,959 year on year, so the March growth figure was smaller than that for February, for which a final report showed a 1.4% increase.

However, regular wages, such as base salaries and overtime pay, climbed 1.5% to ¥279,234 on average, apparently reflecting factors including the growing momentum for wage hikes. Nominal wages exceeded the previous year’s figure for the 27th consecutive month, also marking the longest streak on record.

In this year’s shunto spring wage negotiations, major companies responded with wage hikes at the highest level in 33 years on average. That has raised hopes for further wage increases from April on, but there are no prospects for inflation to ease.

In addition, if the depreciation of the yen brings about higher inflation due to rising import prices, some observers believe it will be difficult for real wages to make a positive turnaround.