TOKYO - Real wages in Japan declined for the third consecutive year, as rising prices continued to outpace wage growth. According to the Ministry of Health, Labour and Welfare’s Monthly Labour Survey for fiscal 2024, inflation-adjusted wages fell by 0.5% compared to the previous year.
Although base pay and overtime saw modest gains, they were not enough to offset the higher cost of living.
The average total cash earnings, which includes basic salary and overtime pay, rose by 3% to 349,388 yen, marking the fourth straight year of nominal wage increases. However, this growth was again overshadowed by persistent inflation, leaving workers with less purchasing power than the year before.
Japan’s real wages have experienced a long period of stagnation and decline, reflecting deep structural issues in the labor market and persistent deflationary pressures that have plagued the economy since the collapse of the asset bubble in the early 1990s. While nominal wages have inched upward in recent years, they have consistently failed to keep pace with inflation, resulting in diminishing purchasing power for many workers. Even during periods of economic recovery or stimulus-driven growth, wage increases have been modest, particularly for regular full-time employees, and virtually negligible for non-regular workers, who make up a growing share of the labor force. This divergence between headline wage figures and real wage conditions has become a critical point of concern for policymakers aiming to revive domestic consumption and achieve a sustainable economic recovery.
Over the past decade, efforts to break free from this pattern have met with limited success. Under the Abe administration’s economic policy package known as Abenomics, the government sought to encourage companies to raise wages through tax incentives and public pressure, especially during annual spring wage negotiations. While some large corporations responded with base pay increases, these were often modest and concentrated in major export-oriented firms, doing little to lift wages more broadly across small and medium-sized enterprises or the service sector. Compounding the issue, the rise in social insurance premiums and indirect taxes such as the consumption tax hike in 2019 further eroded disposable income, offsetting gains made in gross pay. The COVID-19 pandemic then delivered another blow, especially to part-time and contract workers, leading to widened disparities and contributing to a renewed slump in real incomes.
More recently, even as the economy has shown signs of recovery from the pandemic, surging commodity prices and a weaker yen have pushed inflation higher, exposing the fragility of wage growth. Companies have reported increased revenues, but many have been reluctant to raise base salaries significantly, often citing uncertainty about future demand and high input costs. The result has been a persistent gap between nominal wage gains and the actual cost of living, with real wages continuing to decline year after year. Fiscal 2024 marked the third straight year of such decline, with real wages falling 0.5% despite a 3% increase in total cash earnings. For many households, this means rising expenses for food, energy, and everyday goods without a corresponding improvement in income, leading to a squeeze on household budgets and reduced consumer confidence. The government now faces growing pressure to address this disconnect and ensure that wage growth becomes more broad-based and resilient, particularly in the face of demographic challenges and shifting labor dynamics.
Source: テレ東BIZ
