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Wages in Japan Fall at Fastest Pace Since June 2004

Japanese wage earners' total cash earnings fell in January from a year earlier, government data showed on Friday, a sign that companies remain slow in passing on strong corporate earnings to households.

Total cash earnings, which include overtime pay, monthly wages and special payments, fell 1.4 percent in January from a year earlier to 280,260 yen (US$2,370). It was the steepest annual
drop since June 2004, when it logged a 2.0% fall.

It also marked the second consecutive month of decline after a revised 0.1% fall in December, data released by the Ministry of Health, Labor and Welfare showed.

Average overtime pay, a barometer of income conditions, declined 0.7% in January from a year earlier to 19,403 yen, marking the first drop in 54 months. Regular pay fell 0.2% to 249,426 yen, declining for the ninth straight month.

In terms of hours worked, overtime in January was flat from a year earlier at 10.3 hours, the data showed.

The number of full-time employees rose 1.7% year-on-year, while part-time workers rose 1.0%.

Sluggish wage conditions have been blamed for softness in consumption, considered the weakest link in the economic recovery. Private consumption accounts for some 55% of the
economy.

Japan is going through its longest expansion of the postwar era, although the rate of growth has been much lower than in past booms. The Bank of Japan raised interest rates by a quarter
percentage point to a decade-high 0.5% last week, judging that the economy will remain on track for steady growth and prices will rise as a trend.

But central bank Governor Toshihiko Fukui told a news conference after the rate decision that wages are unlikely to grow rapidly in light of tough global competition.