Workers saw their wages increase faster than the cost of living in April for the first time in two years, as the impact of last year’s sales-tax hike faded.
Real pay rose 0.1 percent from a year earlier, the labor ministry said on Tuesday. Overall wages, including overtime and bonuses, climbed 0.9 percent, the most since December, as base pay rose for a second straight month.
The rise could boost hopes for a pickup in consumer spending, a major driver of the Japanese economy. It was nonetheless a marginal 0.1 percent, leaving it uncertain whether the trend would be sustained. The preliminary data also leaves room for a revision that could result in a contraction.
“We need to monitor whether a plus figure will continue in the months ahead,” said an official at the Health, Labor and Welfare Ministry.
Nominal wages rose 0.9 percent to ¥274,577 per worker in April after a drop in March, the ministry said. Wages increased after spring labor-management negotiations lifted pay scales at many major companies.
Prime Minister Shinzo Abe is prodding businesses to plow more of their near-record cash into salaries and investment as he tries to spur an economy that is still weighed by the levy increase. The challenge is to get wages to rise, as the Bank of Japan seeks to generate 2 percent gains in consumer prices.
Large companies agreed to an average 2.6 percent increase in pay in talks with labor unions, a boost that BOJ Gov. Haruhiko Kuroda said he expects to see show up starting in June. The BOJ is counting on higher wages to lift household spending power and drive inflation.
The sales-tax increase in April last year pushed Japan’s economy into recession, prompting Abe to delay another increase slated for this October to April 2017. The government is trying to rein in its budget as it tries to curb the heaviest debt burden among developed economies.
The monthly labor statistics cover around 33,000 businesses selected from among 1.9 million workplaces hiring five employees or more. It serves as the basis for the government in producing an economic outlook and revising unemployment benefits.
Consumer spending remained weak in April. Consumption per household shrank 1.3 percent from a year earlier in real terms in April at households comprising two persons or more, according to the Internal Affairs and Communications Ministry.