Real wages in Japan fall for first time in three months

In an interview on October 8, 2023, representatives from the Japan Broadcasting Corporation (NHK) reported that the Japanese Ministry of Health, Labour and Welfare has released preliminary statistics showing a decline in real wages for the first time in three months. According to the data, real wage income in Japan fell by 0.6% year-on-year in August, driven by wage growth not keeping up with rising prices.

The Ministry based its findings on a survey of over 30,000 companies nationwide that employ five or more people, part of the “Monthly Labour Statistics Survey,” with results for August disclosed on the 8th. The survey revealed that total cash wages, which include various allowances, grew by 3% compared to the previous year, marking the 32nd consecutive month of growth. However, when adjusted for inflation, real wage income decreased by 0.6% compared to the same month last year.

Reuters highlighted that the increase in real wages observed in June—the first such rise in over two years—was largely fueled by enhanced summer bonuses from employers. Nonetheless, the Ministry had previously warned that the effect of these special bonuses would begin to fade starting in August.

Additionally, the Japan Daily News suggested that the recent decline in real wage income is linked to the diminishing impact of summer bonuses. When asked about future prospects, a Ministry official remarked that with prices remaining elevated, making accurate predictions at this time is challenging.