Japanese workers' real wages kept shrinking for a 20th month in November, reports Reuters citing data from the labour ministry. Inflation-adjusted real wages, a key determinant of consumer purchasing power, fell 3.0% in November from a year earlier, faster than a 2.3% annual decrease in October 2023. The consumer inflation rate the government uses to calculate real wages, which includes fresh food prices but excludes owner's equivalent rent, decelerated to 3.3%, the lowest since July 2022, thanks to falling fuel costs and moderating food price hikes.

However, nominal pay grew 0.2% in November, the slowest in nearly two years, after a 1.5% increase in October. The reason behind the marginal pay growth was a 13.2% contraction in special payments, which gives an early glimpse into the winter bonuses companies paid to employees. But the indicator tends to be very volatile this time of year due to the small sample size collected during the year-end period. Regular or base salary in November rose by 1.2% year-on-year, almost the same as a revised 1.3% increase in the previous month. Overtime pay, an indicator of business activity strength, increased by 0.9% year-on-year, the first gain in three months.

Japanese businesses are entering the collective pay talks season known as "shunto", which culminates in March. Last year, major firms struck a deal with unions that resulted in the largest pay rises - 3.58% - in three decades amid four-decade-high inflation. For the 2024 shunto, the country's biggest trade union Rengo has said it will ask for at least a 5% pay increase, including at least 3% base salary growth, to cushion the lasting blow from higher living costs.