The Japan Council of Metalworkers' Unions in Tokyo's Chuo Ward recently displayed the offers made by employers during the spring wage negotiations, known as "shunto". According to the labor ministry's report on August 6, real wages in Japan saw a positive shift, marking the first increase in 27 months since March 2022. The preliminary monthly labor survey for June revealed a 1.1 percent year-on-year rise in real wages per worker, signaling a promising upturn in the country's wage landscape.
One of the key contributing factors to this growth was the significant hike in workers' bonuses, a component of total cash earnings that tends to fluctuate. While the nominal wages for June registered a 4.5 percent increase to 498,884 yen ($3,404), indicating the 30th consecutive month of rise, the real wages' positive trajectory was also supported by a 3.3 percent increase in the Consumer Price Index (CPI) for June. Despite the CPI uptick, the rate of increase in nominal wages surpassed the CPI increase, underlining a favorable trend in the Japanese labor market.
The prolonged decline in real wages for 26 consecutive months from April 2022 to May 2024, impacted by the surge in the CPI, was finally reversed by the recent growth in real wages. A breakdown of total cash earnings per worker for June revealed a 2.3 percent increase in scheduled cash earnings, including basic monthly salary without overtime pay, alongside a notable 7.6 percent rise in special pay like bonuses, which collectively contributed to the overall rise in total cash earnings for the month. However, uncertainties loom over the sustainability of this positive trend in real wages, highlighting the need for continued monitoring and analysis of Japan's labor market dynamics.