This development in Japanese wages is by no means new, as can be seen from this chart for annual changes over the last 4 years. In fact total earnings went down in both 2003 and 2004:
The failure of Japan's strengthening job market to translate into higher pay is hindering growth in consumer spending, which accounts for more than a half of the economy. That leaves the nation reliant on exports at a time when a U.S. housing recession is threatening global growth.
``Falling wages could jeopardize the recovery in consumer spending, leaving Japan more dependent on foreign demand,'' said Yoshiki Shinke, chief economist at Dai-Ichi Life Research Institute in Tokyo, before the report was released.
One reason average wages have slipped since December is the replacement of retiring baby boomers with younger, cheaper employees. Another is the increased hiring of part-time workers, whose pay is on average less half that of full-timers, Shinke said.
Average pay fell about 10 percent between 1997 and 2005. One in three Japanese workers is a part-timer today, compared with one in five a decade ago.