Japan Wage Growth

Japan's nominal wages rose 2.5% year-on-year in June 2024, the fastest pace in four months but below market expectations of 3.2%. In contrast, real wages, adjusted for inflation and a key measure of consumer purchasing power, declined 1.3%, following a 2.6% drop in May. This marked the sixth straight month of falling real wages, as inflation continued to outpace pay gains, fueling concerns over consumer spending. Major Japanese firms agreed to wage hikes averaging over 5% during this year’s spring negotiations, but the impact may not fully appear in official wage data until summer, especially as smaller companies tend to implement raises more gradually. Meanwhile, a labor ministry panel has proposed a 6% hike in the national average minimum wage for the current fiscal year, the largest increase since at least 2002.