Home / Business and Economy / Japan Wages Plummet: Inflation Outpaces Pay
Japan Wages Plummet: Inflation Outpaces Pay
8 Jan
Summary
- Real wages in Japan fell 2.8% in November, the fastest drop since January.
- Overall nominal wages rose slowest since December 2021, up only 0.5%.
- Inflation remains high at 3.3%, challenging the Bank of Japan's policy.
Japan recorded its fastest decline in real wages since January during November, with inflation-adjusted earnings dropping by 2.8% compared to the previous year. This downturn was primarily influenced by a substantial 17% decrease in special one-off bonus payments, a figure often showing volatility outside typical bonus seasons.
Overall nominal wages saw their slowest growth rate since December 2021, increasing by a mere 0.5%. While regular pay showed some resilience with a 2.0% rise, and overtime pay gained 1.2%, these were insufficient to counter the impact of bonus payments and persistent inflation, which stood at 3.3%.
The ongoing trend of inflation outpacing wage growth presents a significant challenge for the Bank of Japan. Despite this, the central bank has signaled its intention to continue raising interest rates this year, anticipating steady wage increases through upcoming labor negotiations. Unions are targeting at least a 5% pay increase.
