MNI BRIEF: Japan June Negative Real Wages Narrow

Japan’s inflation-adjusted real wage, a key gauge of household purchasing power, remained in negative territory for a sixth consecutive month in June but narrowed to -1.3% from May’s 2.6% decline, preliminary data from the Ministry of Health, Labour and Welfare showed Wednesday.

Bank of Japan Governor Kazuo Ueda said last week he expects real wages to improve toward the end of the year, though it remains difficult to predict when they will turn positive.

The sharp wage increases agreed during spring negotiations are gradually being reflected in wage data through July, helping to reduce the negative real wage gap.

According to the final tally by Rengo, Japan’s largest labour union group, workers at 5,162 companies secured an average 5.25% wage hike, the largest in 34 years.

Nominal wages rose 2.5% in June following a 1.4% rise in May, while scheduled earnings increased 2.1%. Overtime pay rose 0.9% and special pay jumped 3.0%. Constant sample data closely watched by the BOJ rose 2.3%, down slightly from 2.4% in May.

The year-on-year increase in total CPI excluding imputed rents slowed to 3.8% in June from 4.0% in May.