Japan’s real wages fall 2.9% in May

Real wages in Japan fell 2.9% in May from a year earlier, marking the fifth consecutive monthly decline and the largest in nearly two years, as wage growth continued at a slower pace than inflation.

The Ministry of Health, Labor and Welfare explained in a statement on Monday that this decline marked an acceleration from the 2.0% decline in April, the largest since September 2023, mainly due to a sharp drop in bonuses.

Kyodo News Agency quoted the statement as saying that nominal wages, which include average monthly cash earnings (base pay plus overtime), rose 1.0% to 300,141 yen ($2,000), continuing their rise for the 41st consecutive month.

Japanese companies agreed during this year’s spring wage negotiations to raise wages by 5.25%; This marks the second consecutive annual increase above 5%, according to the country’s largest labor federation. However, consumer prices rose 4% in May, driven by higher costs of rice and other food items, keeping real, or inflation-adjusted, wages in negative territory.