Japan real wages up 1.4% in Jan., 1st rise in 13 months, as inflation slows

TOKYO, Mar 9 (Kyodo/APP): Japan’s real wages in January rose 1.4 percent from a year earlier, marking the first gain in 13 months, helped by pay growth and a relatively moderate increase in prices, government data showed Monday.

Nominal wages, or the average monthly cash earnings per worker including base and overtime pay, climbed 3.0 percent to 301,314 yen ($1,900), up for the 49th straight month, the Ministry of Health, Labor and Welfare said.

An escalating conflict in the Middle East could affect price movements, with the focus on whether real wages will remain in positive territory. A ministry official said the government “will closely monitor developments.”

Consumer prices rose 1.7 percent in the reporting month, slowing from an average increase of 3.7 percent in 2025 and helping to lift inflation-adjusted wages, a barometer of consumer purchasing power.

The latest increase was lower than 2 percent for the first time since March 2022, when consumer prices rose 1.5 percent.

In the 2025 “shunto” labor-management wage negotiations ahead of the start of the business year for many companies, major Japanese firms agreed to raise wages by an average of 5.39 percent, according to the Japan Business Federation.

The focus at this spring’s negotiations will be on whether wage increases top 5 percent for the third year at large companies and whether higher pay will be seen at small and medium-sized companies.

The Japanese Trade Union Confederation, the country’s biggest labor union umbrella organization, known as Rengo, has called for a real wage rise of 1 percent.

A preliminary tally by Rengo as of last Monday showed that its member unions had demanded an average pay raise of 5.94 percent, down 0.15 percentage point from a year earlier, marking the first drop since 2021.

Real wages affect private consumption, which accounts for more than half of Japan’s gross domestic product.

The Bank of Japan, which raised its benchmark interest rate last December to the highest level since 1995, is closely watching the outcome of this spring’s wage negotiations as rises in both wages and prices are key factors affecting its future policy decisions.