Japan's real wages continue to drop amidst inflation

(MENAFN) Japan's real wages experienced a 1.2% year-on-year decrease in February, marking the second consecutive month of decline as rising inflation eroded purchasing power, according to government data released on Monday. This follows a revised 2.8 percent drop in January, the Ministry of Health, Labor and Welfare reported in a preliminary statement.

Despite this fall in inflation-adjusted earnings, nominal wages, representing the average total monthly income per worker, including base pay and overtime, saw a 3.1% increase, reaching 289,562 yen (approximately 1,981 U.S. dollars). This marks the 38th consecutive month of nominal wage growth.

Breaking down the figures, regular pay, or base salary, increased by 1.6% in February, a slowdown from the 2.1% rise in January. Meanwhile, overtime pay, an indicator of corporate activity, rose by 2.2 percent in February, following a revised 1.5 percent growth in the previous month.

Amidst the current decline in real wages, the report notes that Japanese companies have reached an agreement for an average pay increase of 5.42% through this year's labor negotiations. The Japanese Trade Union Confederation, or Rengo, the country's largest labor union, characterized this increase as the largest pay hike in over three decades. It's important to note, however, that the effects of these spring wage discussions are generally expected to become visible in wage data starting from April.

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