Photo/Illutration A payslip (Asahi Shimbun file photo)

Inflation-adjusted real wages in Japan fell 2.5 percent in 2023, the second consecutive year of decline, as pay increases failed to keep pace with inflation, according to preliminary labor ministry data released on Feb. 6.

The decline was the second sharpest since 1990, when comparable data became available, following a 2.8 percent drop in 2014 when Japan raised the consumption tax rate from 5 percent to 8 percent.

In last year’s “shunto” spring wage negotiations, the average wage increase for regular employees was 3.58 percent, according to a tally by Rengo (Japanese Trade Union Confederation).

The hike was the highest in 30 years.

Due in part to the negotiations, nominal wages, or total cash earnings, rose by 1.2 percent to 329,859 yen ($2,200) per month, the third consecutive annual increase.

However, the consumer price index, excluding imputed rent from owner-occupied dwellings--which is used to calculate real wages--jumped by 3.8 percent, a significant increase.

Of the total cash earnings, scheduled cash earnings such as basic salaries, increased by 1.2 percent to 251,309 yen.

On the other hand, special cash earnings, including bonuses, rose by 2 percent to 59,570 yen, a slower pace than the 4.6 percent increase the previous year, which was buoyed by the economic recovery from the COVID-19 pandemic.

Breaking down the total cash earnings by employment type, full-time workers' salaries increased by 1.8 percent to 436,849 yen, and part-time workers' earnings rose by 2.4 percent to 104,570 yen, both reaching record highs.

Real wages in 2023 came to 97.1, with 2020 used as a base year equal to 100, indicating a continuous downward trend from 1996, which topped out at 116.5.

According to preliminary figures, real wages for December 2023 fell 1.9 percent from the same month in the previous year, marking 21 consecutive months of year-on-year decreases.

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