Japan Wage Growth Falls for 1st Time This Year on Overtime Cuts

By Toru Fujioka

Dec. 1 (Bloomberg) -- Japan's wages dropped for the first time this year in October after companies cut overtime payments by the most in more than six years as they reduced output.

Monthly wages, including overtime and bonuses, fell 0.1 percent to 274,751 yen ($2,876) from a year earlier, the Labor Ministry said in Tokyo today.

A recession in the world's second-largest economy deepened last month as manufacturers planned the sharpest production cuts in 35 years and consumers cut spending. Japanese companies plan to fire about 30,000 temporary and part-time workers before the end of the business year in March, the ministry said last week.

``The significant cut in production naturally puts pressure on wages growth,'' said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo. ``Stalled wages mean weak consumer spending.''

Overtime working hours among manufacturers dropped 11.1 percent, leading to a slide in overall wage growth, said Akira Motokawa, head of the Labor Ministry's statistics division.

Cuts to part-time staff have been announced in the past month by Mitsubishi Motors Corp., Daimler AG's Mitsubishi Fuso Truck & Bus Corp., Isuzu Motors Ltd., Mazda Motor Corp. and Toyota Motor Corp.

Households pared spending for a eighth month in October, the number of available jobs for each applicant slid to a four- year low and consumer sentiment fell to a record.

``In addition to sluggish wage growth, households are coping with severe employment conditions and plunging share prices,'' said Kyohei Morita, chief Japan economist at Barclays Capital in Tokyo. ``This suggests personal consumption will do little to support the economy.''

Japan's benchmark Nikkei 225 Stock Average has lost 45 percent of its value this year.

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net