Summary
- Japanese workers' real wages have turned to a decline after three months as they failed to keep up with the pace of price increases, it was reported.
- Amid expectations that the Bank of Japan will continue its policy of raising interest rates due to rising prices, government bond yields are rising, it was revealed.
- Japan's largest labor union is demanding a 6% increase in this year's wage negotiations, it was reported.
Real Wages Decrease After Three Months
Unable to Keep Pace with Rising Prices
Japanese workers' real wages have turned to a decline after three months. This is due to wage increases failing to keep up with the pace of price increases, which is interpreted as a signal that inflation is spreading.
According to the January Labor Survey released by Japan's Ministry of Health, Labor and Welfare on the 10th, the average nominal wage per person at companies with five or more employees was 295,505 yen per month, up 2.8% from the same month last year. However, real wages, which account for inflation, decreased by 1.8% compared to the same month last year, showing a decline after three months. This is because the consumer price index increase rate used to calculate real wages was 4.7%, exceeding the nominal wage increase.
Inflation is accelerating as food prices such as rice and cabbage soar. A Ministry of Health, Labor and Welfare official told Kyodo News, "If prices do not stabilize, the negative trend (in real wages) is expected to continue until March, before the effects of the spring wage negotiations take effect." Rengo, Japan's largest labor union, is demanding a wage increase in the 6% range in this year's wage negotiations, the highest level in 32 years.
With rising prices, government bond yields are on an upward trend amid expectations that the Bank of Japan will continue its policy of raising interest rates. The yield on 10-year Japanese government bonds rose to 1.575% per annum at one point on this day (bond prices fell). This is the highest figure in 16 years and 5 months since October 2008. Bond selling spread as investor demand was low at the 5-year government bond auction on this day.
Bank of Japan Deputy Governor Shinichi Uchida said on the 5th, "If the economy and prices move as predicted, we plan to continue raising interest rates and adjust the degree of monetary easing." The Bank of Japan's Monetary Policy Meeting is scheduled to be held on the 18th-19th.
Tokyo=Kim Il-kyu Special Correspondent black0419@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
