Real Wages in Japan Drop for Second Consecutive Year Despite Rising Cash Earnings

Feb 06, 2024 | News On Japan

TOKYO - In 2023, the Japanese workforce faced a paradoxical economic situation where, despite a continuous increase in gross cash earnings for the third year, real wages—adjusted for inflation—declined for the second consecutive year. The Ministry of Health, Labour and Welfare's preliminary data reveals that the average monthly cash earnings per worker, including base pay and overtime, was ¥329,859. This marked a 1.2% increase over the previous year and represented the third successive year of growth.

Notably, the component of wages known as "scheduled cash earnings," which includes base pay, witnessed a 1.2% rise from the previous year, reaching a growth rate not seen in 27 years. The Ministry attributes this trend to the outcomes of the spring wage negotiations and the impact of labor shortages.

However, the rise in wages has not kept pace with inflation, resulting in a 2.5% decline in real wages from the previous year, marking a continued decrease for the second year. Additionally, December of the same year saw real wages fall by 1.9% compared to the same month in the previous year, extending the sequence of declines to 21 consecutive months.

This ongoing decline in real wages underscores a growing concern for Japanese workers, whose salary increases are insufficient to offset the effects of rising prices, effectively reducing their purchasing power. The situation highlights the challenges faced by the Japanese economy in balancing wage growth with inflationary pressures.

Source: TBS

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