Japan highlights wage hikes as cornerstone of economic growth strategy

Japan Times

10 hours ago

Japan's government has highlighted wage hikes as a cornerstone of its economic growth strategy, according to a draft of its planned basic policy on economy, public finances and reform.
In the draft submitted at a meeting of the Council on Economic and Fiscal Policy on Friday, the government said that the three decades of the country's cost-cutting economy is coming to an end.
Seeing wage hikes as a key part of its growth strategy, the government vowed to realize pay raises that exceed price increases in a stable way.
The government aims to gain Cabinet approval in mid-June for the first such basic policy under Prime Minister Shigeru Ishiba's administration, launched in October last year.
"We'll do everything we can to prepare for immediate risks while beefing up the growth potential of both the Japanese economy across areas throughout the country, in order to ensure that we transition into a growth-oriented economy without falling back into deflation," Ishiba told the meeting.
In the draft, the government effectively pushed back its target for achieving a primary budget surplus to fiscal 2025-2026. The target of turning the primary balance at the central and local governments into a surplus had been set at fiscal 2025 since fiscal 2018.
The government said that it will seek to boost take-home pay through wage hikes, not through tax cuts. The draft includes a target of stably achieving annual real wage growth of about 1% in the Japanese economy as a whole over the five years to fiscal 2029.
Aiming to help secure funding to raise wages at smaller companies, which employ about 70% of all workers in Japan, the government will promote its five-year plan on the issue.
Under the plan, the government will ensure that the public and private sectors invest about ¥60 trillion to enhance productivity, according to the draft. Individual support will also be given to 12 industries facing serious labor shortages, such as the restaurant and accommodation sectors.
The government promised to continue efforts to raise minimum wages so that the national average will reach ¥1,500 by the end of the 2020s.
The envisaged establishment of a disaster management agency, a key policy of the Ishiba administration, is eyed for fiscal 2026, the government said.
The new body will serve as a command center for the country's disaster reduction and response efforts. It will have a dedicated minister and the authority to issue recommendations to other government agencies.
To tackle soaring rice prices, the government pledged to implement comprehensive measures, including steps to facilitate the distribution of government-stockpiled rice. It also vowed to review its paddy field policy in details to secure a stable food supply.