Japan Wages:

 Article Source:  https://mainichi.jp/english/articles/20230509/p2g/00m/0bu/018000c

Article:

TOKYO (Kyodo) -- Japan's real wages fell 2.9 percent in March from a year earlier, declining for the 12th straight month, affected by rising inflation that led to households tightening their purse strings, government data showed Tuesday.

The drop in inflation-adjusted wages comes as higher food, energy and other prices impacted by Russia's war in Ukraine have outpaced pay hikes. The government of Prime Minister Fumio Kishida has called on businesses to raise wages in line with inflation and help sustain the economy.

Ideas:

Real wages are a reflection of inflation and how much purchasing power it helps the wage earner. So the wage power decreased by 2.9 percent in March. 

Households and wage earners have to choose what they are going to spend their wages on after they pay their monthly bills.

Some companies might agree to increase wages but maybe some companies just can't do it at this time as they are constrained by inflation too and they just can't increase wages at this time. 

Article:

Nominal wages, or the average total cash earnings per worker including base and overtime pay, rose 0.8 percent to 291,081 yen ($2,100), up for the 15th consecutive month, but with the pace of rise limited to less than 1 percent for the third month in a row, according to the Ministry of Health, Labor and Welfare.

Separate data showed that the nation's household spending fell 1.9 percent in March from a year before, following a 1.6 percent rise in February.

Ideas:

Even though nominal wages might have increased, it probably wasn't enough to really overcome the increase in inflation. 

And as a result, with no surprise, consumer or household spending decreased as consumers cut back on what they spend. 

Not all consumers are affected but enough are affected to see a decrease in the economy in aggregate due to increases in inflation. 

It always the debate about how much should an central bank or a government should intervene in a market economy. Too much intervention could disrupt the market and too many intervention or management could also be a problem.

The trick is to find which programs and policies help an economy without causing too much harm.

The Bank of Japan seems to be taking the less is better approach compared to other central banks and increasing interest rates to try and reduce inflation. 

Article:

Households with two or more people spent an average of 312,758 yen, the Ministry of Internal Affairs and Communications said.

The data is a key indicator of private consumption, which accounts for more than half of the country's gross domestic product.

Ideas:

Consumer spending or private consumption is maybe 50 percent of Japan's GDP activity. 

While other advanced economies have spending levels of 60 percent or higher related to GDP activity. 

If consumer spending increased to 55 percent or even 60 percent overtime would it increase GDP growth, yes, no, maybe is the question. 

Without a doubt consumer spending is the weak link in economic growth at this time, but its understandable if consumers are not spending too much at time time, waiting for inflation to decrease. 

Have a nice day and be safe!