Economy Real wages in Japan fall 2.8% in November, marking 11th consecutive drop

Real wages in Japan fell 2.8% year over year in November, marking the eleventh straight month of decline and the most significant drop since January. The fall shows that wage growth is still failing to keep up with rising prices, according to government data released on Thursday. After adjusting for inflation, earnings declined as a 3.3% rise in consumer prices outweighed a modest 0.5% increase in nominal pay, which averaged 310,202 yen (about $1,980). The data were published by the Ministry of Health, Labour and Welfare.

Persistently high food and energy costs have kept real wages—an essential measure of household purchasing power—in negative territory for almost a year, despite nominal wages having risen for 47 consecutive months. The pace of nominal wage growth also eased from October's revised 2.5% increase, mainly due to a sharp 17.0% fall in special earnings, which tend to fluctuate from month to month.

The Bank of Japan will be closely watching this spring's wage negotiations as a key indicator for deciding the pace of future interest rate increases, after implementing a hike to a 30-year high last month. The official did not provide an assessment of the outlook for real wages, saying December data would better reflect winter bonuses. In 2024, real wages posted year-on-year increases in June, July, November and December, when summer and winter bonuses are typically paid.

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