Japan Real Wages Fall to Global Recession Low in Abe Risk

Bloomberg: Japan’s base wages adjusted for inflation last year matched a 16-year low in 2009 when the world was gripped by recession, posing a risk to consumer spending as the nation girds for a higherconsumption tax.

Pay excluding bonuses and overtime payments dropped to 98.9 in 2013 on a labor ministry index released today that takes price changes into account, equaling the level four years earlier. The gauge is based at 100 in 2010 in data dating back to 1990.

Prime Minister Shinzo Abe is calling on firms to boost wages to sustain a reflationary drive so far driven by stimulus and the yen’s 18 percent drop against the dollar last year. Amid a backdrop of market turbulence, business and union leaders met today to start annual pay talks -- due to end in March, a month before a 3-percentage-point increase in the sales levy.

It’s “extremely important” that companies use profits boosted by Abenomics to raise wages and create jobs, Chief Cabinet Secretary Yoshihide Suga said today in Tokyo, adding this was needed to create a positive economic cycle.

The Nikkei (NKY) 225 Stock Average has fallen about 13 percent in 2014, after surging 57 percent last year for its biggest gain since 1972. The yen was 0.2 percent up against the dollar at 101.44 as of 3:33 p.m. in Tokyo, climbing from a five-year low of 105.44 on Jan. 2.

reporters on this story: Andy Sharp in Tokyo