Japanese wage earners' total cash earnings fell slightly in March from a year earlier for the fourth month in a row, data showed on Tuesday, cementing views that the Bank of Japan (BOJ) will go slow in raising interest rates amid tame wages and prices.
Total cash earnings, which include overtime pay, monthly wages and special payments, fell 0.4 percent in March from a year earlier to 281,158 yen ($2,352). That followed a revised 1.0 percent fall in February, data released by the Ministry of Health, Labour and Welfare showed.
"The data confirms the trend that wage earners' incomes have remained poor," said Yoshiki Shinke, an economist at Dai-ichi Life Research Institute. "Companies are reluctant to pass on corporate earnings to workers partly because of shareholders' demands that they use profits to pay more dividends or boost capital spending."
Economists also say that an increase in part-timers and young workers who are replacing baby-boomers hitting the standard retirement age of 60 have also put downward pressure on average earnings.
Average overtime pay, a barometer of income conditions, slipped 0.4 percent in March from a year earlier to 19,806 yen, marking the first year-on-year drop in 56 months. Regular pay fell 0.9 percent to 248,850 yen, declining for the 11th straight month.
Japan's economy is in its longest period of expansion of the post-war era, albeit at a slower pace than previous booms, on the back of solid exports and robust corporate capital spending. Sluggish wage gains have been blamed for a lack of strength in personal consumption, which accounts for about 55 percent of the nation's economy, and tame rises in prices.
Wage growth is thus closely watched by the central bank, which raised interest rates to a decade-high 0.5 percent in February on the view that the economy is expanding steadily with prices in an uptrend.
"If wage gains remain sluggish, personal consumption will also stay weak, so the data provided another factor for the BOJ to hold off from raising rates until later in the year," said Yasuo Yamamoto, a senior economist at Mizuho Research Institute.
Both Yamamoto and Dai-ichi Life's Shinke said they expect the BOJ to move in October given weakness in wages, consumption and inflation. The central bank has said it will raise rates gradually if the economy remains in good shape. Many analysts expect the next rate hike to come in July-September at the earliest.
A Reuters survey of 52 traders and analysts in Tokyo's foreign exchange and bond markets released on Friday showed 27 expecting the next rate hike in the third quarters of this year, with 28 anticipating a further rate hike in January-March 2008.
In terms of hours worked, overtime in March rose 1.8 percent from a year earlier to 11.3 hours, the data showed. The number of full-time employees rose 1.2 percent year-on-year, while part-time workers were up 2.5 percent, a sign that Japan's labour market is getting tighter.
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