Japan's real wages fall for sixth straight month as pandemic bites

A worker cycles in a factory at the Keihin industrial zone in Kawasaki, Japan February 17, 2016. REUTERS/Toru Hanai/Files

TOKYO (Reuters) - Japan’s inflation-adjusted real wages fell for the sixth straight month in August, reflecting a big drop in overtime pay due to the impact on the labour market from the COVID-19 pandemic, government data showed on Friday.

Labour ministry data showed real wages, a key barometer of households’ purchasing power, dropped 1.4% in August from a year earlier, following a downwardly revised 1.8% decline in July.

Wage earners’ nominal total cash earnings fell 1.3% to 273,263 yen ($2,578.68) in August from a year earlier, the fifth consecutive month of declines.

The drop in overtime pay and summer bonuses added to a modest decline in regular pay as the economic blow from the coronavirus crisis prompted companies to cut costs.

Overtime pay, a key gauge of strength in corporate activity, dropped 14.0% in the year to August, following a downward revision to a 17.1% drop and down for a full straight year.

Regular pay - or base salary, which makes up most of total cash earnings - slipped 0.1% in August, down for the first time since June 2019.

Special payments, which predominantly consists of one-off bonuses, fell 4.0% in the year to August, the data showed.

Wage earners’ cash earnings fell about 1% during the January-August period compared with the same period a year ago.

Reporting by Tetsushi Kajimoto; Editing by Kim Coghill