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Japan bonuses up, real wage decline slows in positive sign for Abenomics
April 3, 2015 / 7:03 AM / 2 years ago

Japan bonuses up, real wage decline slows in positive sign for Abenomics

TOKYO (Reuters) - Japanese wage earners’ total cash earnings rose for a third straight month in February and winter bonuses grew for the first time in six years in 2014, government data showed, a positive sign for Tokyo’s efforts to end nearly two decades of deflation.

However, inflation-adjusted real wages fell 2.0 percent in February from a year earlier, down for a 22nd straight month and hurting household purchasing power.

The rate of decline narrowed from January’s 2.3 percent fall, the labor ministry data showed.

Prime Minister Shinzo Abe is pressuring Japanese firms to raise wages, a step seen as essential to generating a virtuous growth cycle of higher wages and consumer spending leading to higher corporate profits, investment and employment.

“The data shows bright signs emerging in the wages trend,” said a labor ministry official. “We cannot tell when real wages will turn positive but at least the year-on-year effect from the sales tax hike will run its course in April.”

The labor ministry data showed wage earners’ total cash earnings rose 0.5 percent to 261,344 yen ($2,184) in February from a year earlier, up three months in a row, helped by a tight job market.

Year-end bonuses paid between November and January rose 1.9 percent to 375,431 yen from a year earlier, the first gain in six years. That marked the biggest increase in a decade, on the back of hefty corporate profits.

Last month Japanese blue-chip firms announced wage hikes that topped increases last year, but overall pay raises across corporate Japan are not expected to offset higher costs of living or be enough to drive a sustainable economic recovery.

The outcome of the annual wage bargaining will be reflected on wage earners’ salaries from the new fiscal year that began on April 1.

Analysts expect total cash earnings, which include both big and small firms and low-paid part-timers, to rise around 1 percent in this fiscal year, far below levels seen needed to accelerate inflation to the Bank of Japan’s 2 percent target.

The ministry’s data showed regular pay, or base salaries which determine the trend of broader wages, rose 0.5 percent, up for a second straight month, suggesting companies remain cautious about substantially boosting personnel costs.

Overtime pay, a barometer of strength in corporate activity, rose 0.4 percent in the year to February.

The labor ministry said computer glitches caused by data sampling changes caused it to delay the closely-watched wages data, which was originally scheduled for release earlier this week.

($1 = 119.6900 yen)

Reporting by Tetsushi Kajimoto; Editing by Eric Meijer

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