Japan's real wages fall in November, posing a threat to demand

TOKYO (Reuters) - Japan’s inflation-adjusted real wages declined at their fastest pace in four months in November, government data showed on Wednesday, clouding the outlook for an economy already under pressure from a nationwide tax increase.

FILE PHOTO: A worker cycles in a factory at the Keihin industrial zone in Kawasaki, Japan February 17, 2016. REUTERS/Toru Hanai

Japan’s economy has suffered in recent months from soft global demand and a slide in consumer spending, after the government raised sales tax to 10% from 8% in October.

Labour ministry data showed real wages, a gauge of household purchasing power, fell 0.9% in November from November a year ago, their fastest decline since July. They also were revised down to a 0.4% contraction in October.

Nominal total cash earnings fell 0.2% in November from a year earlier, their first decline in three months. Their 0.5% gains in October were revised down to no change.

“The fall in real wages was larger in November due to the impact from a rise in the consumer price index,” a labor ministry official told Reuters, adding that fresh food prices increased.

One-off special payments slumped 3.9% in November after a revised 8.5% drop in October. Regular pay - or base salary, which makes up most of total cash earnings and determines a wage trend - inched up 0.1%, according to the data.

Overtime pay, a barometer of strength in corporate activity, declined 1.9% in November from a year earlier, after it was revised down to a 0.1% fall in October. Those figures particularly show reduced overtime hours among manufacturers, the official said.

Revelations last year that labor ministry officials used faulty polling methods, which forced revisions, cast doubt on the accuracy of the ministry’s wage data from 2004 to 2017. The flaw has made it harder to gauge the actual wage trend.

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

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

Reporting by Daniel Leussink