TOKYO (Reuters) – Japan’s real wages posted the largest drop in more than 18 months in December, the government said on Tuesday, as global inflationary pressures and a rise in part-time workers hurt households’ purchasing power.
The world’s third-largest economy has struggled to achieve a substantial improvement in wages for years, undermining its ability to achieve solid economic growth as it also faces a rapidly ageing population.
Inflation-adjusted real wages, a key gauge of households’ purchasing power, slumped 2.2% year-on-year in December, the biggest drop since a 2.3% fall in May 2020, data from the labour ministry showed.
For the whole of 2021, real wages were flat, snapping two years of declines after a 1.2% fall in 2020 and a 1.0% drop in 2019, according to the data.
The drop in the monthly data was mainly due to a jump in a consumer price index that the labour ministry uses to calculate real wages, which gained 2.0% in December, as well as an increase in part-timer workers.
“The overall wage average declined because of a rise in the share of people working shorter hours,” said an official at the labour ministry.
Nominal total cash earnings slipped 0.2% in December, posting their first fall in 10 months, after a revised 0.8% gain in November, while regular pay was up 0.2%, the data showed.
Overtime pay, a barometer of strength in corporate activity, rose 4.8% in December from the same period a year earlier, rising for the ninth straight month.
Special payments, which include the discretionary winter bonuses that firms will slash when they face headwinds, lost 0.9% in December after a revised 6.9% increase in November.
The following table shows preliminary data for monthly incomes and numbers of workers in December:
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Payments (amount) (yr/yr % change)
Total cash earnings 546,580 yen ($4,752.04) -0.2
-Monthly wage 265,011 yen +0.5
-Regular pay 245,911 yen +0.2
-Overtime pay 19,020 yen +4.8
-Special payments 281,569 yen -0.9
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Number of workers (million) (yr/yr % change)
Overall 52.241 mln +1.1
-General employees 35.578 mln +0.5
-Part-time employees 16.662 mln +2.3
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The ministry defines “workers” as 1) those who were employed for more than one month at a company that employed more than five people, or 2) those who were employed on a daily basis or had less than a one-month contract but had worked more than 18 days during the two months before the survey was conducted, at a company that employs more than five people.
To view the full tables, see the labour ministry’s website at: http://www.mhlw.go.jp/english/database/db-l/index.html
($1 = 115.0200 yen)
(Reporting by Daniel Leussink; Editing by Alex Richardson)
