Despite the Rush of Large Corporations Raising Starting Salaries... Japan's Real Wages Decline for 4 Consecutive Months

Despite Japan's nominal wages steadily rising, real wages adjusted for inflation have declined for the fourth consecutive month.

According to the "November 2024 Labor Statistics Survey" (preliminary figures) released by Japan's Ministry of Health, Labour and Welfare on the 9th, the average nominal monthly wage per employee at companies employing five or more people was 305,832 yen (approximately 2.82 million KRW), marking a 3% increase compared to the same period last year. This marks the 35th consecutive month of nominal wage growth.

AFP Yonhap News

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However, real wages, which take price fluctuations into account, decreased by 0.3% year-on-year, continuing a downward trend for four consecutive months. Previously, Japan's real wages had declined for 26 consecutive months from April 2022 to May last year, rebounded in June and July due to increased summer bonuses, but turned negative again in August of the same year.

The Nihon Keizai Shimbun (Nikkei) analyzed, "In November last year, the rise in food prices such as rice and vegetables was prominent, and the government's reduction of electricity and gas bill subsidies also impacted the decline in real wages."

While Japanese workers are struggling with rising prices and decreasing disposable income, some major companies have been confirmed to be competing to raise starting salaries to secure talent.

According to the Asahi Shimbun, Fast Retailing, which operates Uniqlo, announced that starting from March, the monthly salary for new employees will be set at 330,000 yen (approximately 3.05 million KRW), a 10% increase. This comes two years after raising the starting salary from 255,000 yen (approximately 2.35 million KRW) to 300,000 yen (approximately 2.77 million KRW) in March 2023. Tadashi Yanai, chairman of Fast Retailing, expressed his ambition, saying, "We will promote transformation into a global-level elite organization and introduce a new compensation system."

Mitsui Sumitomo Bank also plans to raise the monthly salary for university graduates joining in spring next year from the current 255,000 yen to 300,000 yen. Aeon, Japan's largest employer of part-time workers in the retail sector, is reportedly considering raising the average hourly wage for part-time employees by 7%.

In this context, Yoji Muto, Minister of Economy, Trade and Industry, reportedly met with Masakazu Tokura, chairman of Keidanren (Japan Business Federation), the previous day and requested, "Please raise wages with the momentum seen last year, which was the highest level in 30 years."

However, it remains uncertain whether this wave of starting salary increases among major companies will drive a rise in real wages. A Ministry of Health, Labour and Welfare official explained that the December 2024 wages will include winter bonuses, but whether real wages will turn positive depends on inflation. The official added, "While it is difficult to predict price trends, wages are steadily rising," emphasizing the need to create an environment where wage increases can continue.

Meanwhile, Japan recorded 4,700 corporate mergers and acquisitions (M&A) last year, a 17% increase compared to 2023, marking the highest number since data collection began in 1985. During the same period, the transaction amount also rose by about 8%, surpassing 19.6 trillion yen (approximately 180 trillion KRW). Nikkei reported, "As more companies seek to divest non-core businesses, investment funds have actively purchased these assets," adding, "There is also competition for talent recruitment in the M&A sector within the securities industry."

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