On February 5th, NHK World’s Yuko Fukushima reported that 2024 real wages fell against inflation in the same period for the third straight year.
From Investopedia, “Real income is the amount of money an individual or entity makes after accounting for inflation. It is sometimes called real wage. Tracking the difference between nominal and real income is critical to understanding changes in purchasing power.”
Real wages speak directly to consumer purchasing power; real wages rising higher than inflation means greater purchasing power as well as vice versa.
Buyer and renter purchasing power is critical in determining demand; the higher the purchasing power, the greater the demand pushing prices and rents higher.
Conversely, the lower the purchasing power, the less demand there is, causing prices and rents to fall.
Screen grab taken from news segment. NHK World’s YouTube channel doesn’t allow for videos to be embedded on other sites so click here to watch the whole piece.
Key Takeaways:
Japan's real wages declined for the third straight year in 2024, as inflation (3.2%) continued to outpace wage growth (2.9%).
December 2024 offered a glimmer of hope, with real wages rising 0.6%—the second straight month of growth, helped by winter bonuses.
Despite record-high paychecks, real wages fell 0.2% for the year, marking another setback for workers struggling with rising costs.
A weak yen and persistent inflation may keep real wages negative, making economic recovery uncertain, according to experts.
Spring wage negotiations could bring pay increases, but economists caution they may not be enough to beat inflation.
Contract workers are demanding a 10% wage hike, highlighting widening pay gaps between temporary and full-time employees.
Japan’s wage growth lags other major economies, with real wages showing little progress in 25 years compared to steady increases in the U.S. and the Europe Union.
Consumer spending remains sluggish, as workers tighten their budgets after three consecutive years of falling real wages.
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