TOKYO (Reuters) – Japan must spread wage growth momentum across the country to overcome rising inflation, Prime Minister Fumio Kishida said on Sunday, as annual labor talks end next month.
Wage growth in Japan has been sluggish for years as prudent companies hoard record amounts of cash while holding back labor costs, despite government pressure on companies to raise wages.
The government attaches great importance to raising wages to stimulate private consumption, which accounts for more than half of the economy, hoping to promote a virtuous circle of economic growth and wealth distribution under Kishida’s new capitalism agenda.
“Above all, wages need to rise faster than prices,” Kishida told the annual meeting of his governing Liberal Democratic Party (LDP), which sets the policy agenda for this year.
“The wave of wage hikes must spread to small businesses and localities to be more competitive in the face of fierce competition. Competition attracts workers amid labor shortages. .
Masakazu Tokura, head of Japan’s largest business lobby, Keidanren, expressed support for higher wages.
“Now is a critical stage to revive a strong economy,” he said. Salary and human capital investment are critical…”
In this year’s collective bargaining, large companies are expected to offer the biggest pay rises in 26) years, or 2.85% on average, according to a poll of 26 economists by the Japan Economic Research Center (JERC).
Still, the pace falls short of consumer inflation of 4.2%, and the 5% target set by the Japanese trade union federation Rengo.
In addition, business owners, economists and officials say small firms that provide most of Japan’s jobs often fail to raise wages.