Japan’s inflation-adjusted real wages fell for the fourth consecutive month in November, despite base pay rising at its fastest pace in over three decades, according to government data released on Thursday. The decline highlights the impact of rising prices on consumer purchasing power.
The Bank of Japan has emphasized that sustained and widespread wage increases are a key condition for considering interest rate hikes. Inflation-adjusted real wages, which gauge consumer buying power, dropped 0.3% in November compared to a year earlier, extending the downward trend. October’s previously reported flat reading was revised to a 0.4% decline.
Consumer inflation, which includes fresh food prices but excludes rent, rose by 3.4% year-on-year in November, up from 2.6% in October, signaling mounting inflationary pressures.
Base salaries, or regular pay, increased by 2.7% in November, marking the fastest growth since 1992. This rise followed agreements made during spring wage negotiations by major companies. Overtime pay, an indicator of business activity, grew by 1.6%, accelerating from a revised 0.7% increase in October. Special payments, such as one-time bonuses, surged 7.9% in November after a revised 2.2% decline the previous month.
Total nominal cash earnings rose by 3.0% to 305,832 yen ($1,935.03) in November. Large companies are expected to raise wages by approximately 5% in 2025, matching last year’s level, according to a major business lobby leader. Efforts are also underway to extend this wage momentum to smaller firms.
Prime Minister Shigeru Ishiba has prioritized wage increases in his administration’s policy agenda, vowing to push for higher pay during this year’s spring wage negotiations. At last year’s talks, Japanese companies delivered their largest pay hikes in 33 years.
