Wages data from Japan for January 2025
Labour Cash Earnings +2.8% y/y, solid nominal growth
- expected +3.0%, prior +4.4%
Real Cash Earnings (this is the inflation adjusted figure) -1.8% y/y, dragged down by a two-year high CPI rates
- expected –1.6%, prior +0.3%
Overtime pay +3.1% y/y
- prior +0.8%
Japan's spring wage talks begin in just a few days. Annual rounds of pay negotiations are held each spring. The talks will conclude just after the middle of this month. Agreements reached at these set a standard for the salary negotiations of non-unionised workers and smaller enterprises. Japan's largest labour group last week said its member unions were demanding an average 6.09% pay hike. Also:
The data today shows that despite regular pay rising the most in more than 30 years and overtime pay increasing, inflation at a two-year high (the consumer inflation rate the ministry uses to calculate real wages, which includes fresh food items but not rent costs, rose to 4.7%) dragged down real wages. Real wage growth is key to consumption-driven economic growth.
The Bank of Japan next meet on March 18 and 19 and the Bank is widely expected to keep interest rates unchanged. Officials at the BoJ want great confidence on the sustainability of wage growth before following up with another hike after January rate hike.
