TOKYO, Jan 10 (Reuters) - Japanese workers' real wages
kept shrinking for a 20th month in November, data showed on
Wednesday, raising fresh alarm for the sustainability of the
country's economic recovery as firms enter the period of annual
pay negotiation with labour unions.
    Japan's wage trend draws an unusual amount of attention from
financial markets worldwide since the Bank of Japan regards pay
and inflation outlooks as the most important data in considering
the dismantling of its negative interest rate policy.
    Inflation-adjusted real wages, a key determinant of consumer
purchasing power, fell 3.0% in November from a year earlier,
faster than a 2.3% decrease in October, data from the labour
ministry showed.
    The consumer inflation rate the government uses to calculate
real wages, which includes fresh food prices but excludes
owner's equivalent rent, decelerated to 3.3%, the lowest since
July 2022, thanks to falling fuel costs and moderating food
price hikes.
    However, nominal pay grew a paltry 0.2% in November, the
slowest in nearly two years, after a 1.5% increase in October. 
    The main culprit behind the weak pay growth was a 13.2%
contraction in special payments, which gives an early glimpse
into the winter bonuses companies paid to employees. But the
indicator tends to be very volatile this time of year due to the
small sample size collected during the year-end period.
    "It's too early, if not misleading, to judge the winter
bonus trends from November's special payments figure alone," a
labour ministry official said.
    Regular or base salary in November rose by 1.2%
year-on-year, almost the same as a revised 1.3% increase in the
previous month. Overtime pay, an indicator of business activity
strength, increased by 0.9% year-on-year, the first gain in
three months.
    Japanese businesses are entering the collective pay talks
season known as "shunto", which culminates in March. Last year,
major firms struck a deal with unions that resulted in the
largest pay rises - 3.58% - in three decades amid
four-decade-high inflation.
    For the 2024 shunto, the country's biggest labour group
Rengo has said it will ask for at least a 5% pay increase,
including at least 3% base salary growth, to cushion the lasting
blow from higher living costs.
    Meanwhile, Tokyo's consumer inflation, a leading indicator
of nationwide price trends, showed a further slowdown on
Tuesday, raising hopes for real wages to rebound eventually,
which will provide supporting ground for the Bank of Japan's
monetary policy normalisation.
    The table below shows preliminary data for monthly incomes
and number of workers in November:
   
----------------------------------------------------------------
   Payments             (amount)                (yr/yr % change)
 Total cash earnings   288,741 yen ($2,004)         +0.2
 -Monthly wage         272,379 yen                  +1.2
 -Regular pay          252,591 yen                  +1.2
 -Overtime pay          19,788 yen                  +0.9
 -Special payments      16,362 yen                 -13.2
----------------------------------------------------------------
 Number of workers      (million)               (yr/yr % change)
 Overall                 52.807                     +2.0
 -General employees      35.686                     +1.5
 -Part-time employees    17.121                     +3.6
----------------------------------------------------------------

    The labour ministry defines "workers" as 1) those employed
for more than one month at a company that employs more than five
people, or 2) those employed on a daily basis or had less than a
one-month contract but had worked more than 18 days during the
two months before the survey was conducted, at a company that
employs more than five people.
    To view the full tables, see the labour ministry's website
at: http://www.mhlw.go.jp/english/database/db-l/index.html
    
($1 = 144.1000 yen)

 (Reporting by Kantaro Komiya; Editing by Chizu Nomiyama)