Japan private sector backs 1% real wage growth per year over next five years
The private sector has joined the government in pushing for 1% real wage growth annually over the next five years, as wages in Japan continue to fall on an inflation-adjusted basis.
First mentioned by the government's "new capitalism" panel earlier this month, the goal was brought up again on Monday in a proposal by the private sector members of the government's advisory Council on Economic and Fiscal Policy. They urged the government to ensure achieving the target becomes 'a norm across the Japanese economy' over the next five years.
The council also deliberated on the framework for the annual basic economic and fiscal policy, which is set to be approved by the Cabinet in June.
Real wages — nominal wages adjusted for inflation — declined for three consecutive fiscal years through the end of fiscal 2024. In March, real wages fell by 2.1%, marking the third straight month of negative growth.
'We will work to establish an annual real wage increase of around 1% across the Japanese economy under conditions of sustained and stable inflation,' Prime Minister Shigeru Ishiba said at the council meeting, held at his office on Monday.
The proposal submitted by the four private-sector council members of the council — including Masakazu Tokura, chairman of Keidanren, and Keizai Doyukai President Takeshi Niinami — also asked the government to exert maximum effort to ensure the nation's average minimum wage reaches ¥1,500 ($10.5) an hour by the end of this decade — a goal that's been mooted by Ishiba since assuming office last year.
The current average is ¥1,055 an hour.
'We will aim to achieve the ambitious goal of raising the national average minimum wage to ¥1,500 during the 2020s, and carry out concentrated public-private initiatives over the next five years to that end,' the prime minister said.
In April, consumer prices excluding fresh foods were up by 3.5% year-on-year, higher than March's 3.2% and above expectations.
The Bank of Japan forecasts consumer prices excluding fresh foods to rise 2.2% in the fiscal year ending in March 2026, assuming that progress is made in tariff negotiations between various countries and the United States, and that global supply chains function smoothly, according to an outlook presented to the council by Gov. Kazuo Ueda.
Private-sector council members cited the effects of U.S. President Donald Trump's tariff measures as the largest economic risk factor, and called for structural reform in the nation's economy, such as expanded government investment in labor-saving technologies and more private capital investment.
They were negative on tax cuts.
'Rather than pursuing tax cuts without secured fiscal backing, it is important to solidify the momentum for wage increases by expanding the overall economic pie, while also striving to enhance productivity and strengthen growth potential,' they said in the proposal.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Japan Times
an hour ago
- Japan Times
Japan's firms see business climate worsen amid U.S. tariff hits
Japan's largest businesses turned pessimistic for the first time in more than a year as U.S. President Donald Trump's sweeping tariffs upended key sectors, a development that could complicate the Bank of Japan's policy path. The Business Sentiment Index for large firms registered minus 1.9 for the April-June quarter, slipping into negative territory for the first time since the first quarter of 2024, according to a Finance Ministry survey released Thursday. A negative figure indicates that more companies reported deteriorating conditions than those that saw improvements. Among large manufacturers, sentiment dropped to minus 4.8, also the weakest in five quarters, driven by sharp declines in the automotive, auto parts and steel industries. Nonmanufacturers posted a reading of minus 0.5, turning negative for the first time since the third quarter of 2022, with the retail and telecommunications sectors weighing on the gauge. Thursday's data underscore growing anxiety among Japanese firms amid prolonged uncertainty over U.S. trade policies. Trump initially slapped 25% duties on steel and aluminum in March before recently hiking that rate to 50%. Autos became subject to 25% duties from April, and all other products were simultaneously hit with a 10% levy across the board, a rate that will revert to 24% for Japanese goods in early July, barring a trade deal. The data showed that industries most exposed to the elevated U.S. duties have seen particularly steep drops in sentiment. Automakers and parts suppliers reported a plunge to minus 16.1 from 8.8 in the previous quarter, while steelmakers' sentiment tumbled to minus 29.1 from 0. The bleak readings are likely to inject a degree of caution into central bank policy deliberations even after Gov. Kazuo Ueda reiterated his position earlier this week that rate hikes will proceed if and when conditions allow. The bank's policy board is widely expected to hold its benchmark interest rate steady when it next sets policy on June 17, with focus falling on updated plans for government bond purchases. The figures largely align with the government's latest economic view. Economic Revitalization Minister Ryosei Akazawa warned on Wednesday of rising downside risks to Japan's economy stemming from U.S. trade measures. Akazawa is expected to depart for Washington later this week for his sixth round of trade negotiations with U.S. counterparts.
Japan Times
2 hours ago
- Japan Times
Couche-Tard sees ‘clear path' to Seven & I deal with U.S. stores divestment
Alimentation Couche-Tard says several potential buyers have made proposals to acquire its convenience stores in the U.S. that overlap with Seven & I Holdings, showing progress toward a deal that could help the Canadian retailer win regulatory approval for its proposal to buy its Japanese rival. The two agreed earlier this year to discuss the potential divestment of more than 2,000 stores in the U.S. and seek out interested parties in order to address concerns by Seven & I over a merger being blocked by the U.S. Federal Trade Commission. Couche-Tard also pushed back against any parallels to a failed $24.6 billion merger of grocery chains Kroger and Albertsons. Seven & I, which operates 7-Eleven, Speedway and Sunoco stores, has pushed back against Couche-Tard's unsolicited ¥7.39 trillion ($51.3 billion) takeover proposal and is overhauling its business under new Chief Executive Officer Stephen Dacus to raise its value. Despite the resistance, Couche-Tard, the parent company of Circle K, has advanced discussions by securing a non-disclosure agreement two months ago to gain access to financial information and potentially raise its bid. "We have received multiple indicative proposals from highly experienced and credible buyers,' Couche-Tard said on a website it set up to explain its proposal to buy Seven & I. "We believe the actionable, strong and broad level of interest so far clearly demonstrates that we have several clear paths to consummate the required divestitures and complete the transaction.' Several private equity firms have shown strong interest in buying the assets, Filipe Da Silva, Couche-Tard's chief financial officer, said in March. Couche-Tard also addressed some concerns over a potential merger by highlighting the differences between its proposal and the scuppered combination of Kroger and Albertsons. The FTC blocked the deal on antitrust grounds last year, saying that the divestiture plan was insufficient; Seven & I cited this as a high-risk factor for getting a deal with Couche-Tard approved. "The convenience store industry in the U.S. is highly fragmented and competitive,' Couche-Tard said. "The combination of Couche-Tard and Seven & i results in a business with less than 13% of U.S. convenience stores.' The Canadian retailer also reiterated that it has put "forth a compelling reverse termination fee' in the event of a transaction not going through.
Japan Times
3 hours ago
- Japan Times
Jera touts 20-year LNG agreements with U.S. suppliers
Jera, Japan's largest power generation company, has reached agreements to buy as much as 5.5 million tons per year of liquefied natural gas from U.S. suppliers. The 20-year deals include purchases by Jera from NextDecade and Commonweath LNG, CEO Yukio Kani said in an interview. The company has also entered into nonbinding agreements with Sempra Infrastructure and Cheniere Marketing. The agreements bolster Japan's role as the world's second-largest LNG importer, and come as U.S. President Donald Trump is pushing to expand exports of the fuel. Tokyo is locked in trade negotiations with Washington, and has been trying to leverage its large purchases of American energy to reduce tariffs. While Japan is working on increasing renewable energy and restarting nuclear power, "LNG is a key energy source from a security point of view,' Kani said. Japan's government sees the AI boom potentially lifting power demand over the next decade, and has urged the nation's private utilities to secure more LNG supplies. All of the contracts announced by Jera have flexible delivery terms, which means shipments can be sent elsewhere if Japanese demand weakens. Jera has been developing its LNG trading capabilities over the last decade, and often resells its supply to Europe or other Asian buyers.
