Japan Union Wins 5.25% Pay Rise but Official Data Show Real Wages Shrink

Japan’s largest labour federation, the Japanese Trade Union Confederation (Rengo), said companies have agreed to raise base wages by an average 5.25% in the 2025 fiscal year, its final tally of the spring shuntō talks shows. The increase, equivalent to about ¥16,356 ($110) a month, marks the steepest negotiated pay rise in 34 years and the second consecutive year that settlements have topped 5%. Large employers led the push, while small- and medium-size companies secured a smaller 4.65% gain, highlighting a widening pay gap. The strong outcome contrasts with the latest government data, which indicate that wage growth has yet to translate into broader pay packets. Ministry of Health, Labour and Welfare figures released this week put average cash earnings in May up only 1.0% year on year, well below the 2.4% market forecast, while inflation-adjusted real wages fell 2.9% for a fourth straight monthly decline. The divergence underscores the challenge facing Prime Minister Fumio Kishida and the Bank of Japan as they look for sustained, economy-wide wage gains to support consumption and underpin a durable exit from decades of deflationary pressure.