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TOKYO, May 9 (Reuters) – Japan’s inflation-adjusted real wages in March fell 2.5% from a year earlier, marking declines for two straight years, labour ministry data showed on Thursday.<\/p>\n
The pace of declines accelerated from the previous month’s 1.8% drop as the rising costs of living outpaced nominal wages, the data showed.<\/p>\n
Japan is seeing early signs of achieving a positive cycle of rising wages and inflation. Workers’ earnings, however, are still lagging behind rising costs, underscoring the challenges policymakers face in getting companies to boost salaries.<\/p>\n
Some economists say they expect real wages to turn positive at some point in the 2024\/25 fiscal year.<\/p>\n
Nominal wages, or an average total cash earnings per worker, grew 0.6% to 301,193 yen ($1,940.30), slowing from 1.4% seen in February.<\/p>\n
On the other hand, consumer prices in March rose 3.1% from a year earlier, slowing slightly from 3.3% in February, hovering higher above the Bank of Japan’s 2% inflation target and price gains.<\/p>\n
Of the total cash earnings, regular pay that determines basic salary rose 1.7%, while overtime pay fell 1.5%, down fourth months in a row.<\/p>\n
Special payments, such as bonuses and other benefits, tumbled 9.4% year-on-year in March.<\/p>\n
Major Japanese firms have offered more than 5% increase in workers’ monthly pay at this year’s annual labour talks, a level unseen in roughly three decades.<\/p>\n
But small firms that employ seven out of 10 workers are lagging behind, holding back the pace of wage hikes. Low-paid non-regular workers also account for about 40% of the workforce.<\/p>\n
The spectre of tepid wage gains are dashing policymakers’ hopes for achieving a virtuous economic growth led by durable inflation and solid pay, considered a prerequisite for normalising monetary policy. ($1 = 155.2300 yen) (Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong)<\/p>\n<\/div>\n