Japan real wages drop for eighth month in Aug

Reuters . Tokyo | Published: 00:00, Oct 09,2019


Real wages in Japan adjusted for inflation fell for an eighth straight month in August, raising worries about the resilience in consumer spending after an increase in sales tax and weakening global demand.

Real wages dipped 0.6 per cent in August from a year earlier, labour ministry data showed on Tuesday, following a revised 1.7 per cent annual drop in July.

Monthly wage data showed nominal total cash earnings fell 0.2 per cent in August, down for a second straight month. Regular pay, which accounts for the bulk of monthly wages, was up 0.3 per cent, rising for a second month in a row.

One-off special payments declined 11.4 per cent in August from a year earlier, after a revised 3.3 per cent decline in July. Overtime pay was up 0.9 per cent in August from a year earlier, up for a second straight month.

Weak wages add to worries that Japan’s sales tax increase to 10 per cent from 8 per cent could cut into consumer spending.  A previous tax increase in 2014 hurt sentiment and helped lead to an economic downturn.

Japan’s economy has slowed as the US-China trade war and weak external demand hurt the export-reliant economy. The effect of the higher levy could slow the pace of recovery.

Revelations this year that labour ministry officials used faulty polling methods, which forced revisions, cast doubt on the accuracy of the ministry’s wage data from 2004 to 2017.

The error has made it harder to assess the actual status of wages.

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