"An increase in part-timers remains a drag on regular pay, but wages are holding steady on the whole... We're closely watching the outcome of the ongoing annual wage negotiations between labor unions and management."
- Ministry of Health, Labour and Welfare
More pressure on Shinzo Abe was added this week, as report from the Ministry of Health, Labour and Welfare showed the nation's base wages adjusted for inflation reached a 16-year low earlier hit in 2009, posing a risk to future consumer spending as Japan girds for a higher consumption tax hike in April.
The average pay index, which strips out bonuses and overtime payments and is adjusted for price changes, declined to 98.9 last year. On the contrary, total cash earnings rose 0.8% in December, rising for a second consecutive month, and climbing to the highest in almost two years– another sign of a gradual pickup in salaries. Also, a positive aspect is the fact special payments climbed 1.4% over the period, suggesting that winter bonuses may have registered increases for the first time in five years. Nevertheless, the situation in the labour market is mixed and uneven.
Japan's Prime Minister Shinzo Abe claims companies should boost wages in order to sustain a reflationary drive that was driven by the unprecedented stimulus so far, which pushed the Yen 18% lower against the buck last year. According to Chief Cabinet Secretary Yoshihide Suga, a sustainable rise in wages is vital for creation of a positive business cycle.
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