Japan Wages and Employment April 2008

Average total cash earnings rose in Japan rose in April for the fourth consecutive month as companies added full-time workers to comply with new labor regulations. However the arrival of inflation has meant that in real terms (ie allowing for inflation) contractual wages actually fell year on year. Monthly wages, including overtime and bonuses, were up 0.6 percent from a year earlier to 281,246 yen ($2,670), following a revised 1.5 percent increase in March according to data from the Labor Ministry in Tokyo this morning. When corrected for inflation, however, basic wages (without bonuses, overtime etc) were down 0.4% year on year, marking the first such decline since December.





It is a bit difficult to know what is actually going on here, certainly bonuses must be part of the picture. Employees at manufacturers worked less overtime in April as production slowed, limiting wage growth for the month, according to Shunichi Ando, head of the Labor Ministry's statistics division. Working hours at manufacturers fell 4.1 percent, the biggest drop in six years. In construction, however, overtime was up 11% y-o-y.

The number of people employed on a full-time basis rose 2 percent year on year, exceeding the 0.8 percent increase in part-time staff, as new labor rules lead companies to treat more temporary workers as permanent employees.



Hiring of full-time workers has been accelerating since October as companies anticipated the new labor regulations, which came into effect on April 1. The 0.8 percent increase in part-time staff last month was the slowest rate of increase for part time workers since December 2005.