Japanese wages see sharpest rise in 3 decades, but real wages remain negative
People are reflected on a wall as they cross a road at Tokyo's business district, Japan
Japanese worker's average base pay jumped 2.5 per cent in May. This marks the strongest growth in 31 years. This positive trend comes amid annual wage negotiations.
There is a labour shortage. However, inflation continues to outpace wage growth. Consequently, real wages have declined for the 26th consecutive month.
The Bank of Japan (BOJ) is closely monitoring wage growth. This is a key factor in determining when to raise interest rates. BOJ Governor Kazuo Ueda has stressed the need for sustained wage increases to meet the bank's 2 per cent inflation target.
Nominal wages are rising. Inflation is decayingtheir buying power. Real wages fell 1.4 per cent in May. This follows a 1.2 per cent decline in April. There are signs that the labour shortage is leading to more widespread wage hikes. Companies with 30 or more employees finally saw wage growth outpace inflation for the first time in over two years. However smaller firms are still lagging behind.
The trend is particularly positive for part-time workers. Their wages rose 4 per cent year-on-year in May. This compares to 2.7 per cent increase for full-time employees.
For instance, hotel in Sapporo increased its hourly wages for part-time workers by 15 per cent. This is significantly higher than the 4 per cent raise for full-time staff. The hotel manager attributed this decision. The need to attract part-time workers in a competitive labour market played a crucial role.
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A part-time worker at the hotel mentioned the attractive pay. Also, flexible hours were reasons for returning to the workforce. This occurred after a five-year break.
Part-time workers make up a significant portion of Japan's workforce. They account for 30 per cent of the total. But their wages are considerably lower than salaried workers. On average, they earn only a third.
An economist expects the rising wages for part-time workers to eventually boost consumer spending. This will happen by increasing their purchasing power.
(With inputs from Reuters)
