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Abenomics Disaster: Japan Regular Wages Fall For 19 Consecutive Months; Real Wages Drop To 16 Year Low

Tyler Durden's picture




 

For the past year Abenomics has gotten the "get out of a jail free" card because while the plunging yen was crushing Japanese purchasing power, and sending nominal regular wages ever lower, at least the stock market was higher so (some of the) locals could delude themselves they are getting richer, if only on paper. However, following the most recent 10% correction in the Nikkei which may soon become an all out rout if the 101 level in the USDJPY doesn't hold (and then 100, and so on), all Japan suddenly has left, is the shock of soaring food and energy prices, and the hangover of declining wages that refuse to stop dropping.

Case in point, last night the Japan labor ministry reported that monthly wages excluding overtime and bonus payments fell 0.2 percent in December from a year earlier to 241,525 yen on average per worker, a series of declines which has now stretched to 19 consecutive months.


The silver lining - overall wages rose 0.8 percent from a year earlier to 544,836 yen, helped by a 1.4 percent climb in winter bonuses and increased overtime pay. However, as Goldman ends, this bonus offset is set to end soon: "We think much of the increase in overtime pay—chiefly in the manufacturing sector—reflects companies accommodating rush demand ahead of the consumption tax hike, and we expect this trend to continue for the next few months. That said, we think overtime hours/wages could drop off sharply after the tax hike, exerting downward pressure on overall wages. We expect the wage boost from overtime pay to drop out from April, and we will be focusing on the extent to which spring wage negotiations are reflected in basic wages at the macro level, including SMEs and nonpermanent employees. " 

 Furthermore, while bonuses benefit some, just like the rising stock market, most do not get any bonus benefits - in Japan basic wages accounts for around 80% of overall wages and has a big impact on consumer sentiment and future expected income." Alas, terrified corporations now eyeing the Nikkei's recent plunge will hardly do much if anything to jeopardize their botom line just as a market plunge may be imminent, leading to all sorts of unpredictable consequences for the country.

Some more perspectives from Bloomberg:

Japan’s base wages adjusted for inflation last year matched a 16-year low in 2009 when the world was gripped by recession, posing a risk to consumer spending as the nation girds for a higher consumption tax.

 

Pay excluding bonuses and overtime payments dropped to 98.9 in 2013 on a labor ministry index released today that takes price changes into account, equaling the level four years earlier. The gauge is based at 100 in 2010 in data back to 1990.

 

Prime Minister Shinzo Abe is calling on firms to boost wages to sustain a reflationary effort so far driven by stimulus and the yen’s 18 percent drop against the dollar last year. Amid a backdrop of market turbulence, business and union leaders met today to start annual pay talks -- due to end in March, a month before a 3-percentage-point increase in the sales levy.

 

...

 

Nobuaki Koga, head of Rengo, or the Japanese Trade Union Confederation, said last month it would seek overall base-salary increases of more than 1 percent in spring labor negotiations, and 2 percent for workers at small- and medium-sized companies and non-regular workers.

 

“Base salaries may not rise as much as Rengo has requested” as executives may not be confident enough of Japan’s economic recovery to raise wages, said Yoshiyuki Suimon, an economist at Nomura Securities Co. in Tokyo.

 

...

 

Inflation will accelerate five times faster than wage gains in the year starting April, according to Bloomberg News surveys. Higher prices, coupled with the sales-tax rise, threaten to erode household spending power.

 

Having injected monetary and fiscal stimulus into the economy, Abe’s next challenge is make advances in stripping away regulations to encourage business investment.

 

“Wages might rise a little bit this year, but it won’t be sustainable unless the government pushes through policies to improve productivity,” said Koya Miyamae, a Tokyo-based economist at SMBC Nikko Securities Inc. “It’s easy to boost prices, but it’s much more difficult to have companies raise wages.”

In other words, it appears Abe has at most another 3-4 months before it all unravels. It may be time to corner the Imodium market: recall that the last time the prime minister quit in disgrace as a result of his failed policies he blamed it on explosive diarrhea. Whatever will he blame this time?

 

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Wed, 02/05/2014 - 09:13 | 4403370 Its_the_economy...
Its_the_economy_stupid's picture

Time to raise the minimum wage....bitchez.

Wed, 02/05/2014 - 09:16 | 4403383 GetZeeGold
GetZeeGold's picture

 

 

 

29.5 hours/week max.....it's the law!

Wed, 02/05/2014 - 09:15 | 4403390 Occident Mortal
Occident Mortal's picture

 

Japan's debt is smaller than Lehman's... right?

Wed, 02/05/2014 - 09:23 | 4403417 negative rates
negative rates's picture

A lot smaller, plus it all internal debt, meaning they owe themselves. The U.S. on the other hand,  has a lehman type external debt problem which required that a foriegn company retain any assets.

Wed, 02/05/2014 - 09:25 | 4403423 TeamDepends
TeamDepends's picture

PMs vertical, boys!

Wed, 02/05/2014 - 09:26 | 4403429 Pool Shark
Pool Shark's picture

 

 

Uh, oh... "Thar be Tigers."

Yen up to 100.8; gold exploding. Stay tuned...

 

Wed, 02/05/2014 - 10:03 | 4403586 remain calm
remain calm's picture

What will he blame it on?

I have no idea, put I am sure as the yen dives pornhub utilization will explode in Japan, and the squinting of their eyes will be at a record high

Wed, 02/05/2014 - 09:14 | 4403384 XAU XAG
XAU XAG's picture

Same shit, differant country!

 

It's happening all over.............unless you work for gov

Wed, 02/05/2014 - 09:23 | 4403418 Caviar Emptor
Caviar Emptor's picture

Deesh ekonomi so so suck!
Japan goin' bi-bye.
Coming to a G7 country near you!

Wed, 02/05/2014 - 09:31 | 4403440 BandGap
BandGap's picture

These are "regular" wages. What about the irregular wages? They might be going up.

Can we get some pictures of big breasted Japanese women, please?

Wed, 02/05/2014 - 09:43 | 4403503 eclectic syncretist
eclectic syncretist's picture

Exactly.  The problem with abenomics is the same one the world over, wherever a central bank exists.  Counterfeiting value (fiat) and passing it off to the citizenry as valuable is immoral, and everyone knows and believes counterfeiting to be immoral.  That's why Fedspeak, lies, smoke and mirrors are everywhere emanating from central banksters.  While not everyone realizes that their government counterfeits value in order to control them, most everyone realizes there is something fundamentally wrong with the worlds financial system and that it is vulnerable.  It is their intuitive knowledge of it's immorality that will be it's downfall in the end, as it always has been throughout history.

Wed, 02/05/2014 - 09:47 | 4403528 Its_the_economy...
Its_the_economy_stupid's picture

"like a splinter in your mind"

Wed, 02/05/2014 - 09:20 | 4403404 TorchFire
TorchFire's picture

Perhaps they will be lucky enough to have Mothra hatch from the soil at the Fukishima prefecture.

Wed, 02/05/2014 - 09:37 | 4403472 Caviar Emptor
Caviar Emptor's picture

Reptilian monsters are sooo 20th century...
Giant land-roving jelly fish coming out of Fukushima waste pipes: sooo kewl!

Wed, 02/05/2014 - 09:45 | 4403510 eclectic syncretist
eclectic syncretist's picture

Then gamara, godzilla, and the three-headed dragon will trample Tokyo into a mudhole.

Wed, 02/05/2014 - 09:23 | 4403408 Pig Circus
Pig Circus's picture

What? You can't create wealth out of thin air? Who would have thunk it.

Japan's experiment is just the Fed on steriods. Expect the same results as you all know and we have just witnessed.

Wed, 02/05/2014 - 09:26 | 4403419 Bo Peep
Bo Peep's picture

Hi Telly

What's the economy like on the other side?

Wed, 02/05/2014 - 09:50 | 4403537 Its_the_economy...
Its_the_economy_stupid's picture

Bitchin'!

 

But which side r u on?

Wed, 02/05/2014 - 10:01 | 4403591 Its_the_economy...
Its_the_economy_stupid's picture

BTW, thanks for the warning.

Wed, 02/05/2014 - 09:34 | 4403455 The Dunce
The Dunce's picture

Deflation, deflation, deflation.  Learn it, live it, love it.  Bitches.

Wed, 02/05/2014 - 09:19 | 4403371 TorchFire
TorchFire's picture

Cue the Kamikaze

Wed, 02/05/2014 - 09:13 | 4403380 Sudden Debt
Sudden Debt's picture

I thought Japanese where superior?

 

Wed, 02/05/2014 - 09:19 | 4403392 GetZeeGold
GetZeeGold's picture

 

 

Yeah......not so much.

 

Stupid is universal....and according to Ron White......you can't fix it.

http://www.youtube.com/watch?v=IVfOnjrCFCs

Wed, 02/05/2014 - 09:22 | 4403411 LeisureSmith
LeisureSmith's picture

Superior in the radionuclide ingestion world cup at least.

Slightly OT but... CHANCE OF FLARES: NOAA forecasters estimate an 80% chance of M-flares and a 50% chance of X-flares on Feb. 5th. http://www.spaceweather.com/

We are looking down the barrel right now, i just hope the sun doesn't pull the trigger.

Wed, 02/05/2014 - 09:14 | 4403381 BandGap
BandGap's picture

Well they won't be buying their cigarettes at CVS anyway.

Are Japanese fighter pilots as polite as Chinese fighter pilots? I'd like to know.

Wed, 02/05/2014 - 09:15 | 4403388 The Wisp
The Wisp's picture

At Least the Asians are real good with Math.. they will Figure it Out..     /S

Wed, 02/05/2014 - 09:16 | 4403393 williambanzai7
williambanzai7's picture

Wed, 02/05/2014 - 09:18 | 4403395 VD
VD's picture

shit urself shit the bed shit the policy shit splatterz fan...

Wed, 02/05/2014 - 09:19 | 4403402 pragmatic hobo
pragmatic hobo's picture

there will come a day when yen falls with the market ...

Wed, 02/05/2014 - 09:25 | 4403425 glaucon was right
glaucon was right's picture

oh oh, gold is going up.

 

I predict fat finger.

Wed, 02/05/2014 - 09:35 | 4403464 Winston Churchill
Winston Churchill's picture

Unpossible with China off for the lunar new year.

Is that fear or bullshit I smell ?

Wed, 02/05/2014 - 09:26 | 4403426 SheepDog-One
SheepDog-One's picture

FUCK the debt serfs....we gotta save the BANKSTERS!!

Wed, 02/05/2014 - 09:29 | 4403434 toadold
toadold's picture

Remain Calm! Everrything is OK, Any minute now Abe, Obama, Godzilla, Rodan, the US Fed will come up with a solution....

(Has the DOD fiished making that anti-Black Swan gun yet?)

Wed, 02/05/2014 - 09:31 | 4403447 Caviar Emptor
Caviar Emptor's picture

Amazing what a teeny weeny taper can do to the global economy!
Thanks to Fed policy: when the US gets constipation, the world gets diarrhea

Wed, 02/05/2014 - 09:34 | 4403452 buzzsaw99
buzzsaw99's picture

#WINNING!

Wed, 02/05/2014 - 09:42 | 4403493 Duude
Duude's picture

Japanese wages only dropped for foreign imports, which was part of the goal with Abenomics. More Yen for Japanese production and more Japanese production for the world.  It just could never go forever as they're currently experiencing.

Wed, 02/05/2014 - 09:57 | 4403567 Its_the_economy...
Its_the_economy_stupid's picture

Some day this war's gonna end.

 

http://www.youtube.com/watch?v=sBksHaTQCbU

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