Japan May real wages post biggest drop in nearly 2 years on inflation



TOKYO, July 5 (Reuters) - Japan's real wages extended a decline in May to post the biggest year-on-year drop in nearly two years, government data showed on Tuesday, as consumer inflation hovering near a seven-year-high outpaced nominal wage growth, reducing households' spending power.

Higher living costs amid low-wage growth are likely to curb Japan's consumption-led economic recovery from the coronavirus pandemic.

Inflation is also a top issue for voters in an upper house election on Sunday, although Prime Minister Fumio Kishida's ruling party likely to increase the number of seats it holds, according to an opinion poll published on Monday.

In May, inflation-adjusted real wages, a key gauge of consumers' purchasing power, fell 1.8% from a year earlier, the labour ministry said.

The biggest slump since July 2020 followed a downwardly revised 1.7% decline in April.

The consumer price index the ministry uses to calculate real wages, which includes fresh food items but excludes owners' equivalent rent, rose 2.9% in May, hovering near 3.0% in April that posted the largest jump since October 2014.

Price inflation outpaced nominal total cash earnings, which rose 1.0% in May, down from a downwardly revised 1.3% rise the previous month, the data showed.

Overtime pay, a barometer of corporate activity strength, rose 5.5% year-on-year in May, which was the biggest advance in nine months and higher than April's downwardly revised 5.0% growth.

Special payments, which include seasonal bonuses firms often cut when they face headwinds, fell 7.0% in May, yet the reading tends to be highly volatile in months other than the June to August and November to January bonus seasons.

The drop in special payments, which marked the biggest fall in 16 months, was the main reason for the slowdown of total cash earnings from April, a health ministry official said.

The following table shows preliminary data for monthly incomes and numbers of workers in May: ---------------------------------------------------------------- Payments

(amount)

(yr/yr % change) Total cash earnings 277,016 yen ($2,048.03)

+1.0 -Monthly wage

266,314 yen

+1.5 -Regular pay

247,975 yen

+1.2 -Overtime pay

18,339 yen

+5.5 -Special payments

10,702 yen

-7.0 ---------------------------------------------------------------- Number of workers

(million)

(yr/yr % change) Overall

51.261

+0.7 -General employees

35.432

+0.5 -Part-time employees

15.829

+0.9 ----------------------------------------------------------------

The ministry defines "workers" as 1) those who were employed for more than one month at a company that employed more than five people, or 2) those who were employed on a daily basis or had less than a one-month contract but had worked more than 18 days during the two months before the survey was conducted, at a company that employs more than five people.

To view the full tables, see the labour ministry's website at: Link ($1 = 135.2600 yen)
Reporting by Kantaro Komiya; Editing by Robert Birsel

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