3 days ago
New Govt Growth Strategy Sets Aim of Raising Wages 1% per Year; Plan Includes Boosting Domestic Investment, Paying Greater Fees for Medical Care
Yomiuri Shimbun file photo
Prime Minister's Office
The government has a goal of realizing a steady increase in real wages of about 1% per year, according to a draft of its growth strategy 'Action Plan for a New Form of Capitalism,' the details of which were learned Thursday.
The government aims to achieve the goal through such measures as making sure to increase prices paid by the national and local governments for orders placed with companies and other organizations in line with overall rises in commodity prices, as well as raising official prices for medical and nursing care services paid for by the public health care system, with an eye on bringing up wages, the draft says.
The draft also states that the government will aim to increase domestic investment by the public and private sectors to ¥200 trillion by fiscal 2040 and support private companies' efforts to enhance their 'earning power.'
The first edition of the action plan was created in 2022, and this will be the first revision of the plan under the Cabinet of Prime Minister Shigeru Ishiba. The Cabinet will approve the draft in mid-June.
Given the recent surge in prices, the draft stresses that the central government will play a leading role in raising wages and passing on cost increases through higher prices. Regarding public works projects and outsourced business, both of which have a significant impact on regional economies, the government will thoroughly promote measures to increase prices paid for these, in order to reflect increases in costs.
In areas such as medical and nursing care, where prices are set by the government, the draft points out that the necessity of making a detailed plan to shift away from a cost-cutting model; it also sets an aim of reviewing medical and nursing care fees.
Through these and other measures, the government hopes to achieve a steady annual increase of about 1% in real wages over the five years through fiscal 2029. Real wages are calculated by adjusting nominal wages for the impact of inflation.
The draft also sets out a plan to shift the Japanese economy toward a growth-oriented model driven by wage increases and expansion of investment. In fiscal 2023, private-sector capital investment totaled about ¥102 trillion. The government aims to use investment by both the public and private sectors to raise this amount to ¥135 trillion by fiscal 2030 and to ¥200 trillion by fiscal 2040.
The draft emphasizes the growth of small and medium-sized companies and designates areas such as health care, disaster prevention and preparation and agriculture, forestry and fisheries as priority areas, for which the government will provide support for research and development activities and efforts to expand exports.
The investment policy of the Government Pension Investment Fund (GPIF), which manages public pension funds, will be reviewed to promote 'alternative investments' such as domestic start-up investment companies, as opposed to traditional financial assets like stocks.
With regard to the minimum wage, the draft states that the government will 'continue to work tirelessly' to achieve its goal of raising the national average to ¥1,500 per hour during the 2020s.
