Japan aims for 1% real wage gains in five years

The Japanese government is likely to establish 1% growth in real wages as its first-ever official target for pay increases, a move that comes as prolonged inflation continues to exert a drag on domestic demand.

The government will set a goal of reaching 1% annual gains in real wages by the fiscal year starting in April 2029, according to a policy draft by Prime Minister Shigeru Ishiba's new capitalism panel released Wednesday. The goal is based on the premise that stable and sustainable 2% inflation is in place.

While the government has long urged the private sector to lift compensation, this would be its first official numerical target.


The move comes as Japanese households continue to contend with stagnant real income growth even after large firms offered the biggest bumps to nominal pay in decades in recent years. Consumer inflation has stayed at or above the Bank of Japan's 2% target for about three years, and real wages posted gains in just four months over that time span.