© Reuters. Members of the Japanese Trade Union Confederation, commonly known as Rengo, raise their fists as they shout Gambaro and cheer during their annual May Day rally to demand higher pay and better working conditions, in Tokyo, Japan April 29, 2023. REUTERS/Iss
By Satoshi Sugiyama and Kantaro Komiya
TOKYO (Reuters) – Japan’s nominal base salary grew at the fastest pace in 28 years in May, government data showed on Friday, adding fuel to the debate over when the central bank will unwind its ultra-loose monetary stimulus.
Global financial markets have been closely watching Japan’s wage data, as Bank of Japan Governor Kazuo Ueda regards pay growth as a key gauge to consider in deliberations about a shift in policy.
Regular wages rose 1.8% in May from a year before, labour ministry data showed, the biggest gain since February 1995. The strong base pay growth boosted worker’s total cash earnings, or nominal wages, by 2.5% in May, after a revised 0.8% increase logged in April.
Japan’s largest labour organisation Rengo said on Wednesday that major companies had agreed to average pay hikes of 3.58% this year, the highest since 3.9% in 1993, according to its final survey result.
The result of the spring labour talks, known as “shunto”, will be increasingly seen in government wage statistics over the next few months, a labour ministry official said.
Still, real wages contracted 1.2% in May, the 14th consecutive month of year-on-year declines, as relentless consumer inflation outstrips nominal pay growth and squeezes households’ buying power.
Separate data on Friday showed Japanese household spending fell 4.0% in May from a year earlier, down for a third month and more than the median market forecast for a 2.4% decline.
On a seasonally adjusted month-on-month basis, household spending was down 1.1%, versus an estimated 0.5% gain to mark a fourth month of decline.
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