TOKYO (Reuters) – Japan’s inflation-adjusted real wages inched up for a second straight month in October, government data showed on Friday, but a sales tax hike and the weak global economy raised worries about the prospect for consumer spending.
The nation increased the sales tax to 10% from 8% on Oct. 1, a move seen as critical for fixing Japan’s tattered finances but that could dampen consumer spending and hurt the economy.
Japan’s cabinet approved a $122 billion (£95.09 billion) fiscal package on Thursday to support stalling growth in the world’s third-largest economy amid offshore risks and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.
Labour ministry data showed real wages, a key gauge of households’ purchasing power, edged up 0.1% in the year to October after they were downwardly revised to 0.2% gain in September.
Nominal total cash earnings rose 0.5% in the year to October, after their gains in September were revised down to 0.5% rise, data showed.
“There is no change to our assessment that wages are rising gradually,” a labour ministry official told Reuters.
One-off special payments fell 4.4% in October after a revised 9.1% rise in September.
Regular pay – or base salary, which makes up most of the total cash earnings and determines a wage trend – rose 0.6% year-on-year in October, according to the data.
Overtime pay, a barometer of strength in corporate activity, stood flat in October from a year earlier, after it was revised down to a 0.2% fall in September. These figures likely reflect the government’s “work-style reform” drive on corporate Japan to curb notorious long working-hours.
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 flaw has made it harder to gauge the actual wage trend.
The ministry defines “workers” as 1) those who are employed for more than one month at a firm that employs more than five people, or 2) those who are employed on a daily basis or have less than a one-month contract but had worked more than 18 days during the two months before the survey was conducted at a firm that employs more than five people.
To view the full tables, see the labour ministry’s website at: http://www.mhlw.go.jp/english/database/db-l/index.html
(Reporting by Kaori Kaneko, Editing by William Maclean)