MNI DATA IMPACT: Japan Aug Wages Down; Real Pay Negative

Average Japanese wages fell 1.3% y/y in August, recording a fifth straight drop, with real wages also remaining in negative territory, preliminary data released Friday by the Ministry of Health, Labour and Welfare showed.

Total monthly average cash earnings per regular employee fell 1.3% y/y to JPY273,263 in August, a slightly better outcome that the 1.5% y/y decline seen in July.

In real terms, average wages fell 1.4% y/y in August, a sixth straight drop following a 1.8% decline in July. Total CPI minus impute rents rose 0.2% y/y, slowing from +0.3% in July.

Base wages, the key to a steady recovery in cash earnings, fell 0.1% y/y after rising 0.2% in July.

Overtime pay plunged 14.0% y/y in August following a 17.1% fall previously. The fall was mainly due to a drop in overtime working hours (-13.1% y/y in August vs. -16.2% in July) amid weak economic activities caused by the pandemic impact.

Bonuses and other special pay fell 4.0% y/y in August, falling for a fourth straight month.

The government didn't offer a monthly assessment, maintaining the view that wages fell in the wake of shorter working hours during the Covid-19 outbreak.