CHANTILLY, VIRGINIA (BLOOMBERG) – It’s not just Japanese banks that are feeling the squeeze from the Bank of Japan’s (BOJ) negative interest rates, their employees are too.

The latest data compiled by Tokyo Shoko Research, a private firm, shows that average wages in the construction industry are now 16 per cent higher than the salaries of banking and insurance staff, with the gulf widening as bankers’ pay falls.

The average wage at 102 listed Japanese banks and insurance firms has edged down by 1.4 per cent since 2016, when the BOJ introduced negative rates, making the industry the worst performer among 10 surveyed in a report released on Monday. Pay at all companies in the survey grew 2.9 per cent over the same period.

The figures are another indication that pressure on bank profits partly attributable to the BOJ’s negative interest rate policy is forcing financial institutions to keep a tight lid on costs. Putting more pressure on bank profitability is one reason why the central bank is reluctant to add to its already massive easing programme unless absolutely necessary.

Profits at all sizes of banks from credit unions to the megabanks fell in the fiscal year ended in March, according to a BOJ report last week. Governor Haruhiko Kuroda has pledged to carefully monitor the side effects of easing on banks as he continues with stimulus to achieve a 2 per cent inflation target.

While Mr Kuroda has acknowledged that ultra-low rates are hurting profitability at commercial banks, he has also flagged the impact of Japan’s ageing and shrinking population and a decreasing number of regionally based companies on the profits of local banks in particular.

Average pay in the construction sector has increased 8.7 per cent to 7.49 million yen (S$69,461) since 2015 amid buoyant construction demand thanks to the Olympic games next year and rising number of foreign tourists, the report showed.