Japan December real wages fall on COVID-19, battered in 2020

TOKYO (Reuters) - Japan’s real wages fell for the 10th straight month in December, the government said on Tuesday, as the coronavirus pandemic has taken a heavy toll on the economy and slammed businesses.

FILE PHOTO: Pedestrians wearing protective masks amid the coronavirus disease (COVID-19) outbreak, walk on a street in Tokyo, Japan, February 2, 2021. REUTERS/Kim Kyung-Hoon

The nation in January issued a renewed state of emergency in the Tokyo area and some other prefectures to curb the spread of coronavirus infection, adding to the damage to firms, especially the service sector.

Inflation-adjusted real wages, a key gauge of households’ purchasing power, fell 1.9% in December from a year earlier, the biggest drop since a 2.1% decline in June last year, data from the labour ministry showed.

For the whole of 2020, real wages fell 1.2%, down for a second straight year and the fastest pace of decline since a 2.8% drop in 2014, according to the data.

Nominal total cash earnings dropped 3.2% in December from a year earlier, the biggest fall since December 2009 when the Lehman Brothers collapse hit the economy.

Overtime pay, a barometer of strength in corporate activity, shed 8.9% in December from the same period a year earlier, falling for the 16th straight month.

“The wage situation is expected to remain severe for a while due to the coronavirus pandemic,” said an official at the labour ministry.

Special payments, which include winter bonuses, fell 5.4% in December after a revised 12.8% drop in November. And regular pay - or base salary, which makes up most of total cash earnings and determines a wage trend - dipped 0.1%, the data showed.

The ministry defines “workers” as 1) those who were employed for more than one month at a company that employed more than five people, or 2) those who were employed on a daily basis or had less than a one-month contract but had worked more than 18 days during the two months before the survey was conducted, at a company that employs more than five people.

To view the full tables, see the labour ministry's website at: here

($1 = 105.6100 yen)

Reporting by Kaori Kaneko; editing by David Evans