TOKYO — Japan’s salaries increased for the first time in nearly two years in January as companies boosted pay for part-timers, aiding Prime Minister Shinzo Abe’s effort to end 15 years of deflation.
Base pay, excluding bonuses and overtime, rose 0.1 per cent from a year earlier, the first gain in 22 months, the Labour Ministry said yesterday. But overall pay fell 0.2 per cent, the first drop in three months.
Consumer spending and industrial output are surging ahead of a sales tax increase next month, fuelling demand for part-time workers. The question for Mr Abe is how quickly tightening in the labour market spreads to full-time workers, helping to generate sustained wage gains that help households cope with higher taxes and rising inflation.
“The tightening labour market is putting upward pressure on wages,” said Mr Hideo Kumano, chief economist at Dai-ichi Life Research Institute. “We still need to see a higher rate of increase in pay to be assured of growth prospects after the sales-tax hike,” he added.
Wage gains still remain below the rate of inflation. Consumer prices excluding fresh food rose 1.3 per cent in January, matching the fastest pace since 2008 and more than halfway to a 2 per cent target that Bank of Japan Governor Haruhiko Kuroda is shooting for with unprecedented easing.