TOKYO (Reuters) - Japan's inflation-adjusted real wages in March fell 2.5% from a year earlier, marking declines for two straight years, labour ministry data showed on Thursday.
The pace of declines accelerated from the previous month's 1.8% drop as the rising costs of living outpaced nominal wages, the data showed.
Japan is seeing early signs of achieving a positive cycle of rising wages and inflation. Workers' earnings, however, are still lagging behind rising costs, underscoring the challenges policymakers face in getting companies to boost salaries.
Some economists say they expect real wages to turn positive at some point in the 2024/25 fiscal year.
Nominal wages, or an average total cash earnings per worker, grew 0.6% to 301,193 yen ($1,940.30), slowing from 1.4% seen in February.
On the other hand, consumer prices in March rose 3.1% from a year earlier, slowing slightly from 3.3% in February, hovering higher above the Bank of Japan's 2% inflation target and price gains.
Of the total cash earnings, regular pay that determines basic salary rose 1.7%, while overtime pay fell 1.5%, down fourth months in a row.
Special payments, such as bonuses and other benefits, tumbled 9.4% year-on-year in March.
Major Japanese firms have offered more than 5% increase in workers' monthly pay at this year's annual labour talks, a level unseen in roughly three decades.
But small firms that employ seven out of 10 workers are lagging behind, holding back the pace of wage hikes. Low-paid non-regular workers also account for about 40% of the workforce.
The spectre of tepid wage gains are dashing policymakers' hopes for achieving a virtuous economic growth led by durable inflation and solid pay, considered a prerequisite for normalising monetary policy.
($1 = 155.2300 yen)