Japan has been witnessing a slowdown in wage growth for years, with companies under pressure from fears of accumulating record amounts of cash while reducing labor costs, despite government pressure on companies to increase wages.
The government is placing a heavy emphasis on wage increases to stimulate private consumption, which accounts for more than half of the economy, hoping to unleash a positive cycle of economic growth and wealth distribution under Kishida’s neo-capitalist agenda.
“Above all, there is a need for wage increases that outweigh price increases,” Kishida said at an annual gathering of his ruling Liberal Democratic Party that sets the political agenda for the year.
He added, “The wave of rising wages must extend to small companies and local areas to enhance competitiveness amid intense competition to attract workers,” in light of the labor shortage.
In conjunction with introducing “structural wage increases,” Kishida pledged to continue taking steps to reduce energy and food prices to ease the burden of inflation on households.
Large companies during this year’s labor talks are expected to offer the biggest wage increase in 26 years, an average of 2.85 percent, according to a survey of 33 experts by the Japan Center for Economic Research.
However, this rate will be lower than consumer price inflation, which reached 4.2 percent.
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