Japan Wage Growth

Nominal wages in Japan rose 2.3% year-on-year in April 2025, matching the pace seen in March but falling short of market expectations of a 2.6% increase. Meanwhile, real wages—adjusted for inflation and a key indicator of consumer purchasing power—declined by 1.8%, marking the fourth consecutive month of contraction. The weak real wage data highlights the ongoing challenge posed by persistent inflation, which continues to outpace the pay increases granted by employers. This is despite major Japanese firms committing to wage hikes of over 5% during the annual spring labor negotiations in March. The subdued wage growth adds to concerns over Japan’s economic outlook, especially amid rising global uncertainty fueled by recent US tariffs. It also complicates the Bank of Japan’s efforts to normalize monetary policy, as stagnant real incomes may weigh on consumer spending and hinder broader economic recovery.