Japanese salary earners have seen their wages increase at the highest rate in nearly 30 years, but it still falls short in the face of soaring prices. According to a report released by the Japanese Ministry of Health, Labour and Welfare on Wednesday (June 5), in April, the basic salary for employees in companies with more than 5 employees increased by 2.3% compared to the previous year.
In April, the basic salary reached 264,503 Japanese yen (approximately $1,700), an increase of 0.6 percentage points from March, marking the highest level since October 1994. The total cash wages, including basic salary and various subsidies (nominal wages), also rose by 2.1% to 296,884 Japanese yen (about $1,900), marking the 28th consecutive month of growth. The growth rate expanded by 1.1 percentage points compared to March, reaching the highest level in 10 months.
Media reports have indicated a significant increase in wage growth across all industries last year. During the spring labor negotiations of that year, the wage growth rate was about 3%, the highest level in 30 years. This year’s spring labor negotiations further elevated the average wage increase to 5.28%.
Companies with good performance have provided room for salary increases. According to the business operation statistics released by the Ministry of Finance on Monday (3rd), the ordinary profits of all industries (excluding finance and insurance) in the first quarter of this year reached 27.4279 trillion yen, a 15.1% increase compared to the same period last year. This marks the fifth consecutive quarter of growth and sets a historical record for the first quarter.
However, due to the significant depreciation of the yen leading to soaring prices, wage growth still lags behind the rapid rise in prices. Considering price fluctuations, real wages per capita have decreased by 0.7% compared to the same period last year. This marks the 25th consecutive month of negative growth, albeit showing some improvement compared to the 2.1% decrease in March.
Since June, prices, especially utility fees, have been on the rise. This is due to the government ending the subsidy program for electricity and gas prices implemented to cope with high prices in May. Additionally, escalating tensions in the Middle East and the weakness of the yen have also exerted upward pressure on prices, particularly energy prices like gasoline.
The Kishida administration is actively promoting positive growth in real wages. On May 31, Prime Minister Kishida held a meeting with representatives from the business sector at the Prime Minister’s Office to discuss the issue of the virtuous cycle between wages and prices. Kishida stated during the meeting that considering this strong wage growth trend, the Japanese government will implement unified tax cuts starting in June to support household disposable income, ensuring that income growth surpasses price increases this year.