Longest Decline of Real Wage

Despite Prime Minister Fumio Kishida hopes the people to realize the gift from economic growth, real wage in Japan does not show obvious rise. The Ministry of Health, Labour and Welfare released the Monthly Labor Survey for March 2024, which marked new record of decline in real wage for twenty-four consecutive months. It is skeptical that Kishida will reach his goal of achieving a rise of real wage within this year.

According to the survey, the total cash earnings in March was ¥301,193, which showed 0.6% of increase from the same month of the previous year. The ministry estimated, however, that the consumer price index (CPI) rose by 3.1% in March. Thus, the real wage in March was concluded as 2.5% of decline.

 

The real wage showed 1.8% of decrease in February. It is sure that the decline of real wage is accelerated. The total cash earnings marked high growth in March 2023. Therefore, the real wage in this March significantly declined, when it was compared to the result in the same month of previous year.

 

The nominal wage has been increasing for twenty-seven consecutive months, caused by serious shortage of labor and positive motivation of raising wage in each company. It is the longest hike ever. But the price of crude oil or food has risen significantly. Current trend of cheap yen in the foreign exchange market also brought price hike of imported goods or raw materials.

 

It is expected that historically high-level wage hike in the spring labor negotiation will be reflected to the wages of workers later this year. Japanese Trade Union Confederation announced that the average of wage hike in the negotiations this spring marked as high as 5.17%. It is paralleled with the level in 1991, when the bubble economy was still remaining in Japan.

 

But the trend of wage hike is mainly about the major corporations. The small and midsize enterprises, which occupy 99% of all companies in Japan, are still struggling to add the cost on the price of their products. A survey conducted by an organization showed that over seventy percent of non-regular workers experienced no wage hike at all since the beginning of this year.

 

According to a survey of Japan Center for Economic Research, most economists expect that the wage growth will surpass price hike in the second half of this year. Kishida promised wage hike beyond price hike this year in his policy speech to the Diet this January. “I employ every measure to achieve wage hike surpassing price hike this year. We must do it,” said Kishida.

 

However, there is a few measures to oppress the rise of price of energy and food caused by international instability. What he did to cheap yen was have a meeting with Governor of the Bank of Japan, Kazuo Ueda, when Ueda’s comment triggered further devaluation of yen. No survey endorses Kishida’s new year resolution of real wage hike.

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