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Japan real wages fall for 16th straight month in July

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– Japanese real wages extended their fall to a 16th consecutive month in July, government data showed on Friday, as salaries failed to keep up with rising prices.

Global financial markets closely follow wage trends in the world’s third largest economy as the Bank of Japan emphasises sustainable wage rises as a prerequisite for deciding whether and how to pull the plug on its ultra-loose monetary stimulus.

Inflation-adjusted real wages, a barometer of consumers’ purchasing power, slid 2.5% in July from a year earlier following a 1.6% slump in the month before.

The consumer price index officials use to calculate real wages, which includes fresh food prices but excludes owners’ equivalent rent, remained flat at 3.9%.

Workers at major Japanese companies saw an almost 4% increase in wages this year, according to a survey by business lobby Keidanren.

Prime Minister Fumio Kishida has ramped up efforts to nudge companies into boosting wages. He said earlier this month the government would accelerate efforts on compiling new stimulus steps to cushion the economic blow from rising inflation.

Nominal pay growth in July slowed to 1.3%, after a 2.3% jump in June and 2.9% hike in May, which marked the fastest growth in nearly three decades.

July’s base annual salary went up 1.6%, an improvement from June’s revised 1.3% increase.

Overtime pay, a gauge of business activity strength, rose 0.5% after a revised 1.9% uptick in June.

Special payments climbed 0.6% in July from a 3.5% gain the month prior, although the indicator tends to be volatile in months outside the twice-a-year bonus seasons of November to January and June to August.

Separate data from earlier this week showed Japanese household spending in July suffered its biggest drop in nearly 2-1/2 years, falling 5.0% from a year earlier.

The table below shows preliminary data for monthly incomes and numbers of workers in July: —————————————————————-

Payments (amount) (yr/yr % change)

Total cash earnings 380,656 yen ($2,582.64) +1.3

-Monthly wage 272,120 yen +1.5

-Regular pay 253,066 yen +1.6

-Overtime pay 19,054 yen +0.5

-Special payments 108,536 yen +0.6

—————————————————————-

Number of workers (million) (yr/yr % change)

Overall 52.571 +1.9

-General employees 35.772 +1.2

-Part-time employees 16.799 +3.2

—————————————————————-

The labour 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:

($1 = 147.3900 yen)

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