Japan must spread the pace of pay rises across the country to combat increasing inflation when annual labor negotiations wrap next month, according to Prime Minister Fumio Kishida, who has the support of a large business lobby. In Japan, wages have lagged behind inflation for years as cautious businesses kept record amounts of cash while reducing labor expenses, despite government pushes for pay increases.
Under Kishida’s new capitalism agenda, the government has placed a significant emphasis on wage increases to promote private consumption, which accounts for more than half of the economy, in an effort to initiate a positive cycle of economic growth and wealth distribution. In addition to attaining “structural salary hikes,” Kishida promised to keep working to lower energy and food prices to lessen the burden of inflation on families.
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Masakazu Tokura, the head of Keidanren, the largest business lobby in Japan, showed support for the wage campaign. According to a survey of 33 economists conducted by the Japan Economic Research Center (JERC), large businesses are anticipated to offer the largest pay increases in 26 years, or an average of 2.85%, during this year’s labor negotiations.
Even so, that rate would fall short of consumer inflation, which is currently at 4.2%, and the 5% target set by Rengo, the Japan Trade Union Confederation. Meanwhile, small businesses, which employ the majority of Japanese citizens, are unable to raise wages, according to business owners, economists, and government officials.
source: Channel News Asia
