Japan Wage and Hours Worked

In April 2017, Part time wages recorded a growth of 2.6% year on year, highest rise since 2007.
Published monthly by the Ministry of Health, Labour and Welfare. Updated to the month of April 2017 (published on May 23rd, 2017).

Recent data trend

In March 2017, basic and overtime wages, otherwise known as regular wages, fell by 0.2% year on year (YoY), first fall since June 2016. Despite the ongoing tightening in the labor market, wages in Japan remain stubbornly flat. The growth in regular wages in Japan have hovered in the range of -0.6% to 0.7% since April 2013. A sustained acceleration in the wage inflation is a critical factor for Japan to attain its reflation goal, but remains a road mirage for Japan.

In addition, Total wages also witnessed a fall by 0.4% YoY in March, highest fall in wages since June 2015. The real wage growth, after offsetting the inflation in the consumer price, fell by 0.8% YoY in March. This mark the steepest decline in real wages since June 2015.

Decline in working hours in March, by 1.9% YoY, is a plausible reason for the decline in wages. However, while there is certainly a correlation, the decline in working hours alone is not the reason. For example, in July 2016, working hours fell by 2.5%, but wages managed to rise by 1.2% YoY.      

Given the prevalent labor shortage situation in Japan, there should be an economic force encouraging wages to rise. At 2.8%, the current unemployment rate is the lowest since 1993. The robust corporate profit growth (up 16.9% YoY during the Oct-December 2016 quarter) also suggests that employers have a capacity to raise wages if they choose to. However, the puzzling fact is that wages in Japan continue to show little inclination to rise. One could argue it takes a while for the wage inflation to build up, but it has already been 2.5 years since the unemployment rate reached 3.5%, the level economists used to consider as a full-employment equivalent.

The wage data for the month of March 2017 are in tandem with the recently released data by JBRC, a research outfit set up within Recruit Holding. The JBRC pointed out that the average hourly wage of temp workers fell by 2.4% YoY in March 2017. While the data are less reliable than official wage statistics, we would interpret the results as an additional sign that wages in Japan remain stagnant despite the labor shortage environment.

Brief overview of “Wage and Hours worked”

Official name of the statistics is “Monthly Labor Survey”, but we prefer to call it “Wage and Hours worked” to distinguish the survey from “Labor Force Survey” which is the source of the official unemployment rate in Japan. “Wage and Hours worked” surveys enterprises with a work force larger or equal to 5 persons. It also does not include government and municipal officials. For example, in 2012, “Wage and Hours worked” survey covered 45.8 million workers in Japan, while “Labor Force Survey” covered 62.7 million workers. YoY% wage growth rate shows irregularity, as the months of bi-annual bonus payment day shift between months depending on the year. 3 or 6-month average YoY% is often used to overcome this problem. Wages in Japan has been steadily falling in Japan since 1998. Between 1997 and 2012, wages has fallen by 12.5%, or by 0.9% per year on average.

For more information, visit the official government page

"Part time hourly wage", "Temp hourly wage" are statistics published by JOBS Research Center (JBRC), a research center established within Recruit Jobs Co., Ltd. As of July 17, 2015, the original publication are published only in Japanese. Below are a link to their web site (available only in Japanese). http://jbrc.recruitjobs.co.jp/

Wage levels of Full-time and Part-time workers

Temp and part time workers' hourly wage (published by Recruit Jobs)

Note: Part time hourly wage for April 2017 was published by Recruit Jobs Co.,Ltd on May 22, 2017. Temporary hourly wage for April 2017 was published on May 16, 2017. See "Brief overview of wage and hours worked" above for more details.

Source: MHLW, JMA.

The Next Release Date:June 6th,2017 (Preliminary April data)

                                     June 23rd, 2017 (Revised April data)


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