Shrinking Japanese wages have plateaued out, rising a meager 0.1 percent in a sign of boosting confidence for Prime Minister Shinzo Abe’s economic push.
Base pay excluding bonuses and overtime rose 0.1 percent from a year earlier, the first gain in nearly two years of steady decline, the welfare ministry reported Tuesday. Overall pay fell 0.2 percent, the first drop in three months.
Although imperceptible, the hike is seen as a sign that Abe’s economic policies to end 15 years of deflations may be starting to unfold.
Wage gains remains below the rate of inflation, which is cutting into consumers’ real spending power, particularly ahead of a sales-tax increase in April when consumer spending and industrial output is expected to surge.
The momentum among companies and consumers is fueling demand for part-time workers. Abe needs to ensure that the labor demand spreads to full-time workers before the spending rush wanes down after sales tax increase to 8 percent next month.
“The tightening labor market is putting upward pressure on wages,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. “We still need to see a higher rate of increase in pay to be assured of growth prospects after the sales-tax hike.”
Once the rush is past, the economy is forecast to shrink an annualized 3.9 percent in the three months starting April, slumping after a projected fifth straight quarter of growth, according to a Bloomberg survey.
Several companies have said that they plan to wage wages for workers once the country’s fiscal year commences in April, Financial Times reports.
On Tuesday, Daiwa Securities Group, Japan’s second-largest broker said it would be raising salaries and extending the mandatory retirement age of its workers to 70 from 60 in a bid to help motivate employees and improve productivity.
Japanese manufacturers have also signaled they are ready to raise wages for the first time in years.
The leading union at Toyota Motor Corp, the world’s largest car maker by volume, has asked for an increase in monthly base pay of 4,000 yen ($39.44), or 1.15 percent, while unions at Nissan Motor Co and Honda Motor Co called for a base pay increase of 3,500 yen or 0.96 percent.
By Maesie Bertumen
Main image: Flickr/ SnippyHolloW