Japanese girls wandering the streets of Shibuya, Tokyo, Japan.
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According to Asset Management One, Japanese wages are expected to see their first real growth in more than three decades in the second half of 2024.
The investment management firm noted in a recent report that wages in Japan will grow faster than in 2023. Average monthly cash income in the country The annual growth rate was 3.6% in July. By comparison, Japan’s core consumer price index (excluding fresh food) Climbed by 2.7July%.
Real wages in Japan rose 0.4% in July compared with the same period last year, rising for the second consecutive month after rising 1.1% in June.
One economist at Asset Management predicts that regular wages will likely maintain this growth rate this summer, despite recent wage fluctuations. JPY and Japanese stocks.
“Japan’s past three decades have been characterized by extremely low price inflation and negligible wage growth,” said Asset Management One economist Yuko Iizuka.
Wages growing faster than inflation generally mean consumers have more disposable income. Much of the increase in disposable income will be pumped back into the economy, Iizuka added, helping Japan emerge from three decades of stagnation.
“For nearly 30 years, stagnation has been a drag on the economy. This ‘normal’ is now changing,” she observed.
The report noted that other macroeconomic trends driving long-term wage growth include labor shortages and that the yen’s depreciation against the dollar may have peaked. In addition, Japan’s largest labor union announced in March after spring wage negotiations in Haruto that it expected large companies to increase wages by 5.28% in 2024. move Marks largest pay increase in 33 years.
“It appears that the impact of the substantial wage increase from the spring 2024 collective bargaining negotiations is already being felt,” Yamato Research Institute explain.
Daiwa economists including Keiji Kanda wrote in a report last week that real wages are expected to continue growing due to “sustained high levels of wage growth,” thanks in large part to wage negotiations.
“We also expect underlying inflation to stabilize around 2% due to the cycle of wage increases and price transmission,” Daiwa said.
But Iikuza warned that uncertainty about Japan’s long-term economic outlook could limit the growth of consumer spending.
“Long-term anxiety – especially among young people – may further constrain the growth of consumer spending… Many young people may choose to increase their savings as a prudent option,” she said.
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