In Japan, it’s getting tougher to make ends meet as wages lag inflation
With prices still rising faster than salaries, the actual purchasing power of Japanese workers continues to shrink – despite a boost in pay
Real wages declined 2.9 per cent from a year earlier in May, compared to economists’ consensus call of a 1.7 per cent fall, the labour ministry reported on Monday. Nominal wages rose 1 per cent from the previous year, climbing at a much slower pace than economists expected.
While the drop in real wages shows the pain being felt by voters heading into the election on July 20, the strength in underlying wage trends keeps the Bank of Japan on a path of mulling further interest rate increases.
The sharp drop in real wages highlights the persistent strength of inflation and presents a headache for the minority ruling coalition ahead of the coming upper house election. With prices continuing to rise faster than wages, public frustration has grown, pressuring political leaders to come up with more convincing strategies to alleviate the cost-of-living squeeze.
“In the ongoing election campaign, candidates often cite real wage figures from this monthly report,” said Sota Takano, a senior economist at Itochu Research Institute. “Today’s release suggests people are struggling with the cost of living – that’s a discouraging result for Ishiba.”