Japan's largest labor group secures a third straight year of wage gains above 5%

Workers at 5,368 companies affiliated with Rengo, Japan's largest labor union group, secured an average wage increase of 5.01 percent this year, according to the group's final tally released Friday and reported by The Japan Times. It was the third consecutive year in which the headline figure topped 5 percent.

The final number was slightly below earlier counts. An initial tally had shown 5.26 percent, and a reading in early April stood at 5.09 percent, Bloomberg reported, as smaller firms that settled later lowered the average. Large employers continue to grant bigger increases than the small and medium-sized businesses that employ most Japanese workers.

The gains matter for the Bank of Japan, which has argued that a durable cycle of rising wages leading to rising prices is needed to justify moving away from years of extraordinarily loose policy. Three straight years above 5 percent strengthen that case. Yet Japanese analysts note that once inflation is subtracted, real wages have often fallen, leaving households poorer despite the large nominal raises.

That gap between nominal and real pay is the central tension. Wage growth that only matches or falls behind price increases does not raise living standards, and it complicates the central bank's assessment of whether the economy can sustain higher interest rates.