• Bloomberg


Salaries extended their longest slide since 2010, even as Prime Minister Shinzo Abe urges companies to raise wages as part of his bid to reflate the world’s third-largest economy, government data showed Thursday.

Regular wages excluding overtime and bonuses fell 0.3 percent in September from a year earlier, marking a 16th straight month of decline, according to labor ministry data. Total cash earnings rose 0.1 percent.

The data underline the difficulties Abe faces in getting companies on board in his drive to end more than a decade of deflation among nascent signs of price gains after the Bank of Japan’s unprecedented easing. Unions are demanding higher base pay, and the question now is whether firms will agree in wage talks early next year.

“The key for the success of ‘Abenomics’ is whether companies will raise wages,” Norio Miyagawa, a senior economist at Mizuho Securities Research and Consulting Co. in Tokyo, said before the report. “Companies still aren’t confident enough that growth will be sustained and will probably hesitate to raise wages, especially base salaries, for the time being.”

Wages are falling behind price gains. Consumer prices excluding fresh food rose 0.7 percent last month from a year earlier, a fourth straight increase.

The economy is forecast to grow until April, when a sales tax hike is likely to cause a one-quarter point contraction. Domestic demand is boosting output, and a survey of purchasing managers Thursday showed manufacturers in October at their most confident in over three years.

Abe said as the start of a special Diet session last month that he aimed to boost employment and raise wages, creating a “virtuous circle” to spur consumption and investment. The government began holding meetings with business and union leaders in September to help persuade firms to raise wages.

Kaoru Yosano, a former finance minister, said in an interview in October that wage gains hinge on a pickup in demand, not just pleas by Abe for companies to do their part.

The unions’ “shunto” spring wage talks next March will play a key role in any hikes.

The talks “will be one clear point at which there is a chance to either show that something new is happening or raise further doubts,” Jerry Schiff, the International Monetary Fund’s mission chief for Japan, said this week in Tokyo. “It’ll be important to get wages to begin to rise soon.”

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