Wednesday, September 4, 2013

Japanese Wage Data Not All That Spectacular (Exception: Finance Industry)

The results of Japan's Provisional Report of Monthly Labour Survey for July 2013 are now available. The Wall Street Journal calls the wage data "not all that gloomy," citing the fact that nominal earnings are up 0.4%. According to the article,
"That’s good news for Prime Minister Shinzo Abe as he has made wage growth a key measure of success for Abenomics, which seeks to lift Japan out of 15 years of deflation. While the aggressive monetary easing and government spending measures have pushed up production as well as prices, Mr. Abe has acknowledged that without substantial wage growth, there can be no sustainable economic expansion."
I think it's too early to claim good news or to call this substantial wage growth. Here are just a few quick points from my skim-through of the survey results. The 0.4% increase that the article refers to is for nominal total cash earnings (compared to the same month a year ago), for all industries. This can be broken down into a 0.3% fall in contractual cash earnings and a 2.1% increase in special cash earnings. Companies are giving summer bonuses but not committing to presumably more permanent base-pay increases.

Both the contractual and special cash earning changes vary a lot across industries. In the finance and insurance industry, total cash earnings were up 1.5% and special cash earnings were up 17.8%. On the other extreme is the education and learning support industry, for which total cash earnings were down 6.1% and special cash earnings were down 20.1%.

The total real wage is down 0.4% from the same month a year ago. On a seasonally-adjusted basis, the number of regular employees has neither increased nor decreased. If any readers are adept at interpreting this survey data, please chime in with any insights I have missed.

I believe my earlier post--"What Does Abenomics Feel Like?"-- is still quite relevant.


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