Japan’s wages jump by biggest margin in almost 26 years

TOKYO – Japanese workers’ nominal wages in December rose at the fastest pace since 1997, an acceleration in gains that may fuel speculation that the central bank will consider shifting policy after governor Haruhiko Kuroda steps down in April. 

Nominal cash earnings for Japan’s workers jumped 4.8 per cent from a year earlier in December, the Labour Ministry reported on Tuesday. Hefty increases in winter bonuses boosted pay packets well beyond a 2.5 per cent growth estimate by economists. 

With

developments in wages

closely linked to the possibility of policy change at the Bank of Japan (BOJ), the unexpectedly large gain may stoke market bets that the central bank will adjust or back away from its stimulus programme under a new governor. Still, the jump offers only a snapshot of one month’s figures. 

Scheduled pay rose 1.9 per cent, offering a figure closer to the trend of wages outside extra payments, and well below the 3 per cent the central bank and economists say is needed to support stable 2 per cent inflation in Japan. 

Real wages also edged up for the first time since March, eking out a 0.1 per cent gain, a figure that shows the pay gains in Japan are still far from providing households with extra spending power after accounting for inflation.

Speculation over the direction of monetary policy continues to simmer as the government prepares to make its nomination for Mr Kuroda’s replacement later this month. 

A Nikkei report on Monday said the government had approached deputy governor Masayoshi Amamiya to become BOJ chief. Economists and investors see Mr Amamiya as the front runner closest to being a candidate of continuity.

Government officials denied that the report was based on facts. BLOOMBERG