Deputy Chief Cabinet Secretary Seiji Kihara said on Wednesday that the government of Japan will put raising wages at the top of its list of economic goals for next year.
“Lack of wage growth is the biggest problem for Japan’s economy.” Unless wages go up, companies won’t invest more, and people won’t spend more. Kihara said this while appearing on a TV show.
Companies decide how much to raise pay, but Kihara believes the government can help by providing tax breaks.He also said that the government can force companies to be more open about how much they spend on human resources.
The comments are similar to those made by Bank of Japan (BOJ) Governor Haruhiko Kuroda, who has said that getting higher wages is important for the economy to meet its 2% inflation target on a long-term basis, which would be driven by strong domestic demand.
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“The government will pay more attention to raising wages.” “This is even more important now that prices are going up,” Kihara said.
The approval ratings of Prime Minister Fumio Kishida’s government have dropped, in part because people are worried about the rising cost of living. This is because the recent sharp drops in the value of the yen have made the already expensive cost of importing raw materials even higher.
Sources told Reuters that the government was worried that the BOJ’s economic stimulus policy would weaken the yen. This was one reason why the BOJ made the unexpected decision earlier this month to change its bond yield control and let long-term interest rates rise more.
In November, Japan’s consumer inflation hit a 40-year high of 3.7%, which was much higher than the Bank of Japan’s goal. This hurts households because wages haven’t gone up enough to make up for the rise in the prices of consumer goods.
