FILE PHOTO: Japanese Prime Minister Fumio Kishida speaks during his press conference, after the parliament re-elected him as prime minister following an election victory last month by his ruling Liberal Democratic Party, in Kantei, Japan November 10, 2021. Stanislav Kogiku/ Pool via REUTERS
November 26, 2021
By Leika Kihara and Kantaro Komiya
TOKYO (Reuters) -Japanese Prime Minister Fumio Kishida is expected to urge the business sector to raise wages by around 3% in next year’s annual wage negotiations with labour unions, Kyodo news agency reported on Friday.
The request will be part of Kishida’s initiative to distribute more wealth to households, and help ease the pain on consumers from rising oil and food costs.
The proposal, to be made at a government panel to be held later on Friday, will be the first time in four years for the government to set a numerical target for businesses on the level of wage hikes.
There is uncertainty, however, on whether companies will heed Kishida’s request for voluntary wage hikes as many of them have kept wage growth low to protect jobs and weather the hit from the coronavirus pandemic.
“With economic uncertainty heightening, companies will be quite cautious about raising wages,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
“It will be pretty tough to achieve a 3% wage hike as the economy isn’t recovering as strongly as the government had expected.”
Former Prime Minister Shinzo Abe had little luck boosting wages despite repeated requests for businesses to pass on huge profits they earned from his “Abenomics” stimulus policies.
In last year’s wage negotiations to set salaries for 2021, Japanese firms offered the lowest wage increases in eight years as the pandemic hurt corporate profits.
Slow wage growth has been among factors that kept the Bank of Japan from hitting its 2% inflation target, as it saps households’ purchasing power and discourages companies from charging more for their goods.
Part of efforts to prop up a still-stagnant economy, Japan unveiled last week a record $490 billion spending package, bucking a global trend towards withdrawing crisis-mode stimulus measures.
The package included funding to increase government-set wages for nurses and social care workers by 3%.
(Reporting by Leika Kihara and Kantaro KomiyaEditing by Chang-Ran Kim, Nick Zieminski and Sam Holmes)