Japan’s nominal wages rise at fastest pace in about 30 years
Nominal wages rose 4.6% in September compared with a year earlier, marking the largest gain since 1997.
Japanese workers' nominal wages surged at the fastest rate in nearly three decades during September, with the Labour Ministry reporting a 4.6% increase compared to the previous year. This marked the largest gain since 1997, as per the Labour Ministry's report on November 6. Base pay saw a 3.7% increase, while excluding bonuses, overtime, and sampling distortions, full-time workers experienced a record 3.1% rise.
Real cash earnings, adjusted for inflation, excluding rents, climbed 2.2% from a year earlier, outpacing forecasts and previous growth. Economists had anticipated a slowdown due to fewer working days. Labour unions are preparing for annual wage negotiations, which will conclude in March. Early indications suggest momentum from recent years will persist, with the largest union federation urging for wage increases of around 6%, a more ambitious target than the 5% achieved from 2026.
This wage growth trend could keep the Bank of Japan (BOJ) on track to raise interest rates as early as December. The median economist forecast predicts a terminal rate for the current cycle at 1.75%, suggesting two more quarter-point hikes. BOJ Governor Kazuo Ueda affirmed that underlying inflation had reached a level close to the central bank's 2% target, emphasizing the need for labour and management to incorporate inflation expectations in wage negotiations.
Sustained wage growth is expected to bolster the BOJ's rate hike plans, potentially reaching 2% by December 18.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
