Expert: Japan's real-wage slump could be turning cornerーNHK WORLD-JAPAN NEWS

Key Concepts

• Real Wages: Wages adjusted for inflation, reflecting actual purchasing power.
• Base Pay: The fixed compensation an employee receives, excluding bonuses or overtime.
• Shunto (春闘): Annual wage negotiations between business and labor unions in Japan.
• Inflation Ceiling: The point at which the rate of price increases begins to slow down.
• Provisional Gasoline Tax: A temporary tax levied on gasoline.

Japan’s Real Wage Outlook: A Weekly Economic Briefing

This report focuses on the upcoming release of Japan’s labor ministry statistics regarding inflation-adjusted wages for December and the entirety of 2025, with a particular emphasis on the pressure facing real wages. The analysis, presented within the “Bispix” segment, highlights the critical juncture in Japan’s economic recovery.

Real Wage Decline in 2025

Throughout 2025 (up to November, as per the data presented), real wages in Japan experienced a consistent decline. This downward trend is directly attributed to the fact that price increases have consistently outpaced wage growth, thereby diminishing take-home pay for workers. This situation is occurring as annual wage negotiations – known as Shunto – between business and labor leaders are underway.

Wage Negotiation Targets & External Factors

Labor unions are aiming for an average base pay increase of at least 5%, alongside regular raises. However, the outcome of these negotiations is heavily influenced by external economic factors, specifically the impact of US tariff policies. According to Morita Yuihiro, Senior Economic Analyst at Meiesta Research Institute, “attention is on whether the talks will deliver robust pay hikes amid real concerns about one major external factor.” While both business and labor representatives express a desire for stable wage increases and positive real wage growth, last year’s financial performance for many businesses was negatively impacted by the aforementioned US tariffs, raising questions about their capacity to meet labor’s demands.

Anticipated Improvement in Real Wages – A Cautious Optimism

Despite the challenges, Morita Yuihiro anticipates a potential shift in the trend. He notes that while the cost of essential food items, including rice, remains high, the overall pace of inflation appears to be approaching its “ceiling.” He predicts that real wages will eventually begin to rise.

Factors Contributing to Potential Increase in December Data

The December data release is expected to reflect a positive influence from several factors. These include:

• Winter Bonuses: The inclusion of winter bonuses in the December figures will contribute to an increase in overall wages.
• Abolition of Provisional Gasoline Tax: The removal of the temporary gasoline tax will help to moderate the rise in energy prices.
• Energy Bill Support: Government support measures for electricity and gas bills, implemented from January to March, will further alleviate the burden of rising energy costs.

Morita Yuihiro suggests these factors will likely result in real wages moving “in a narrow, slightly upward band towards spring.”

Limited Impact on Consumption & Importance of Sentiment

Even if real wages show an increase starting in December, the anticipated rise is expected to be modest. Consequently, the impact on consumer spending is likely to be limited. Modas emphasizes the crucial role of boosting consumer sentiment to stimulate positive effects on spending. As he states, it’s “important for consumer sentiment to get a boost to encourage positive effects on spending.”

Potential Turning Point

Monday’s announcement of the labor ministry statistics is presented as a potentially significant “turning point” for the Japanese economy. The data will provide crucial insights into the trajectory of real wages and the effectiveness of ongoing economic policies.

Yanaka Marie concludes the report, emphasizing the importance of the upcoming data release.