Japanese summer bonuses fell the most since the global financial crisis partly due to the effects of sampling, while monthly pay rose at a modest pace for a third straight month in September, underlining concerns about tepid wages and private consumption. Real wages, adjusted for inflation, rose 0.5 percent year-on-year in September, up three months in a row, as nominal wages outpaced tame inflation, the labour ministry data showed on Monday.
Policymakers are putting pressure on Japanese firms to use their record cash piles to boost wages and capital expenditure in a bid to generate private sector-led growth and accelerate inflation to the central bank's ambitious 2 percent target. "Disregarding effects of data sampling, summer bonuses probably grew slightly and winter payment is likely to rise as well. But wages are not strong enough to accelerate the private consumption," said Makoto Watanabe, senior economist at BNP Paribas Securities.
Summer bonuses paid during the June-August period came to 356,791 yen ($2,897.68) on average, down 2.8 percent from the same period last year, the biggest drop since 2009. Labour ministry officials attributed the decline in summer bonuses to the change in data sampling adopted in January, the retirement of well-paid elder workers, and a rise in part-timers who now account for 30 percent of wage earners. "Wages are increasing moderately as a trend due to the tight labour market," said a ministry official.
Still, wage gains have been far below an ambitious 3 percent annual rate Prime Minister Shinzo Abe's government is aiming for in order to raise Japan's gross domestic product (GDP) by a fifth to 600 trillion yen over the next five years. Total cash earnings rose 0.6 percent year-on-year in September to 265,527 yen, up for three straight months. Many companies, particularly small firms, have been hesitant to boost wages as they want to avoid marked increases in fixed labour costs. Regular pay, which determines base salaries, rose an annual 0.4 percent, up for the seventh straight month. Overtime pay, a barometer of strength in corporate activity, rose an annual 1.4 percent.