WHILE Japan’s stimulus policies are beginning to have some effect, with more people beginning to spend, pensioners, a big and growing category of consumers, are clinging on to their cash, limiting the chances of a demand-led recovery.

    Consumption, which as in many developed economies makes up just under two-thirds of the economy, increased last fiscal year for most groups, but spending by households where no one was employed, which includes pensioners, fell 1.5 percent, keeping overall household spending flat.

    That group, which made up 38 percent of all households last year, up from 24 percent in 2000, won’t be helped by Prime Minister Shinzo Abe’s big push for companies to raise workers’ pay.

    Real wages rose 0.1 percent in April, the first increase in two years, according to the labor ministry, but pensions have fallen for the last six months. Inflation-adjusted real wages fell 0.1 percent in May after a revised decline by the same margin in April, suggesting that consumer spending will remain weak.

    The jobless rate was steady at an 18-year low of 3.3 percent and job availability hit a two-decade high in May, reflecting a steady economic recovery.

    “As incomes improve among working generations, private consumption is expected to pick up through fiscal 2016, but growth would be restricted by rising retirees,” said Kiichi Murashima, economist at Citigroup Global Markets Japan.

    “Rising share of those who don’t benefit from income gains and improving job conditions could help offset positive factors.”

    Chizuru Yoneyama, 79, is among them.

    “I get a pension,” she said, as she walked down a shopping arcade in Tokyo’s working-class Sugamo area, “but it’s not enough to live on.”

    (SD-Agencies)