6 January 2023
TOKYO — Japanese Prime Minister Fumio Kishida called on Thursday for business leaders to accelerate wage rises, warning that the economy risked falling into stagflation if pay rises lagged price increases.
The government vows to spend 1 trillion yen ($7.5 billion) in the next five years for reskilling workers, while encouraging firms to make pay scales more flexible in raising pay.
Japanese firms tend to prefer one-off bonus payments for rewarding performance rather than raising fixed base pay, so they can easily adjust personnel costs in good times or bad.
The Japanese Trade Union Confederation, known as Rengo, is demanding wage rises of 5% at this year’s labor and management talks. Analysts consider that to be a tall order, since annual wage rises have averaged around 2% in recent several years.
Still, Japanese policymakers have pushed for companies to implement pay rises that outpace inflation and therefore lift real wages. That is needed to stoke a virtuous cycle of growth in the economy, the world’s third largest, they say. #