Japan's real wages rise 0.4% in July, up for 2nd straight month

Japan's real wages in July edged up 0.4 percent from a year earlier, rising for the second consecutive month, boosted by pay hikes and summer bonuses, government data showed Thursday, Kyodo reports. 

Nominal wages, the average total monthly cash earnings per worker including base and overtime pay, increased 3.6 percent to 403,490 yen ($2,800), up for the 31st straight month, the Ministry of Health, Labor and Welfare said.

The rise in real, inflation-adjusted, wages followed a 1.1 percent increase in June, the first gain in 27 months, also boosted by summer bonuses.

Special cash earnings, largely reflecting bonuses, climbed 6.2 percent to 118,807 yen in July, while overtime and other allowances were down 0.1 percent at 19,590 yen, according to the data.

The ministry attributed the continued rise in real wages to more companies paying bonuses compared with a year earlier. But the margin of increase was smaller as more companies paid bonuses in June than July, a ministry official said.

The official said real wage growth could start to decline again in August or later, outpaced by inflation.

Excluding bonuses and nonscheduled payments, average wages increased 2.7 percent to 265,093 yen, the biggest rise in more than 31 years.

The upward trend in regular pay continued after Japanese companies agreed to hefty hikes at this year's spring wage negotiations.

The average monthly wage increase reached 5.1 percent, rising over 5 percent for the first time in 33 years, according to the Japanese Trade Union Confederation, the country's largest labor federation.

"Wages have clearly been on an accelerating trend in nominal terms," said Koichi Fujishiro, senior economist at the Dai-ichi Life Research Institute, providing backing for the Bank of Japan to raise its policy rate further going forward.

Average monthly nominal wages for full-time workers grew 3.6 percent to 529,266 yen, while part-time workers saw monthly pay rise 3.9 percent to 114,729 yen.