(Bloomberg) -- Japan's companies cut bonus payments in July, leading to a surprise drop in total pay for workers. While this was the first fall in 14 months, previous gains have been weak and well below the level needed to generate stronger inflation.
Highlights of the wages report |
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Key Takeaways
Japan's labor market is the tightest it has been in decades, but that hasn't translated into sustained wage pressures. Base wages for full-time workers haven't risen more than 1 percent in any month over the last two years, and while part-time workers are seeing better per-hour pay they are working fewer hours.
Read more: Decoding key wage indicators in Japan.
Economist Views
- A drop in summer bonuses weighed on overall cash earnings in July and winter bonuses are likely to be lower than last year, said Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance Co. in Tokyo. “Scheduled pay, which has a bigger impact on consumer spending, is rising only slowly and real wages will probably keep dropping for a while. That means consumer spending will struggle.”
- “My conclusion is the pace of wage gains remains weak, weighing on consumer spending,” said Masaki Kuwahara, senior economist at Nomura Securities Co. Weak summer bonuses were expected because they are based on corporate earnings a year ago, when the yen was rising, he said.
Other Details
- Number of hours worked dropped 0.5 percent.
- Full-time workers worked 0.2 percent fewer hours, while part-timers worked 1.9 percent less.
- Overtime pay climbed 0.1 percent.
--With assistance from Isaac Aquino
To contact the reporters on this story: Yuko Takeo in Tokyo at ytakeo2@bloomberg.net, Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.
To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net, Henry Hoenig, James Mayger
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