Japan has wage pressure under control, says BOJ governor
Japanese companies have no pressing need to raise wages as jobs were retained during the pandemic-led economic slump, and therefore do not need to fill job vacancies as quickly as companies in the United States, said Bank of Japan Governor Haruhiko Kuroda.
Companies in the country stuck to their custom of retaining jobs and kept wages low to weather the downturn. As a result, supply-side constraints in Japan have not been as severe as in the United States, which is why there has been “no pressing need” for firms to raise wages and prices, he said.
However, “to completely eradicate [Japan’s] deflationary mindset, cooperation of firms and households are necessary,” he said.
Kuroda emphasised the need to create a virtuous cycle in which higher wages give households more purchasing power, which in turn would allow them to be more accepting of price hikes.
“If Japan can simultaneously protect public health and improve consumption activities through the use of vaccination certificates, for example, the economic recovery trend is very likely to become more pronounced,” he added, according to Reuters.
The country’s consumer inflation is stuck around zero as the wider public has been taking a cautious stance on the economic outlook.