Wages are rising in Japan more than they have in decades, at least for some workers. But so are prices, leaving many people feeling they must scrimp more than ever.
In May, the consumer price index was up 3.2 per cent from a year earlier, well above the central bank’s target of about 2 per cent. That’s great news for policymakers trying to get the world’s third largest economy out of the doldrums by keeping credit super cheap to spur demand and push prices higher.
But a government survey of companies with five or more employees found real wages, taking into account higher prices, fell 3 per cent from the a year earlier in April, marking the 13th straight month of declines.
Although all the major companies have raised wages this year, with large labour union members landing a 4 per cent hike, the highest in 30 years, a quarter of small and medium-size businesses — employers of more than two-thirds of all workers — gave no pay raises, according to the think tank Tokyo Shoko Research.
“My wages haven’t gone up at all,” said Kyoko Sano, a salesclerk at a Tokyo department store.
Sano feels a bit of a jolt when a cashier rings up her purchases and angst when she checks out prices of her favourite cookies, potato chips, rice crackers and drinks. Prices have all jumped, and the usual discount offerings have disappeared. Her electricity bill keeps climbing.
“There’s no point in buying things like body lotion in advance before their prices rise. Pretty soon you run out, and you end up having to go buy them, anyway. There’s an expiration date on cosmetics,” she sighed.
Japanese workers make less across the board than their counterparts in the US and Europe. A graph comparing wages for the last several years shows the line for Japan going straight across from left to right. In other nations, including the US, they climb gradually higher.
Average pay in Japan is about three-fourths of the OECD average of about USD 51,000. Hourly rates for workers in many Tokyo service jobs average about 1,300 yen (USD 9.30) an hour, up from the previous 1,000 yen (USD 7.10) an hour. They’re lower in most of the country.
So while a barista in New York makes about USD 22,500 a year, according to Intuit, one in Tokyo makes 2.19 million yen (USD 15,700), Economic Research Institute data show. In theory, a vibrant economy is supposed to lead to higher prices and wages. But purchasing power has to keep up to sustain consumer demand. It’s unclear that today’s inflationary pressures, set off by the rising costs for oil and other commodities, will spur the sort of positive growth cycle Japan’s been trying to achieve for years.