In part this increase seems to reflect bonuses and overtime, since if we look at the real wage index this dropped back again at a minus 0.1 percent annual rate in March, after having undergone something of a recovery in January and February.
Wages have been rising this year as a labor regulation change prompts companies to promote their part-time workers to permanent status. As households face the fastest inflation in a decade, the gain in wages may not be enough to boost consumer spending, which accounts for more than half of the economy.
The number of those employed on a full-time basis rose 2.3 percent, the most since February 1993.
``The revised labor law is encouraging companies to hire full-time workers and is the main reason for wage growth,'' Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo, said before the report. ``But it's not enough to encourage consumers to increase spending as gains in food and oil prices outpace wage growth.''
Under new rules for part-time workers, companies are urged to treat them as permanent staff for pay and other benefits. The law took effect last month. Hiring of full-time workers has been accelerating since October, while increases in part-time staff have been slowing.
Reports this week also showed household spending fell at the fastest pace since December 2006 in March and the number of jobs available to applicants fell to the lowest in almost three years. Overall household spending fell 1.6 per cent in March from a year earlier in price-adjusted real terms.
It is being suggested that the retirement of baby boomers is one of the major reasons companies want to secure full-time labor. The first of Japan's 7 million baby boomers reached the retirement age of 60 last year, according to Dai-Ichi Life Research Institute Inc., as a result employers are being left with an increasing number of positions to fill.
The Bank of Japan yesterday cut its economic growth forecast, saying the economy will grow 1.5 percent in the year ending March 31, down from the October estimate of 2.1 percent.
