Japan proposes stimulus package for companies raising wages

A governmental economic-policy panel has proposed a fresh stimulus package, including shoring up support for companies increasing employee salaries.
By: | November 11, 2021

The package is part of prime minister Fumio Kishida’s “urgent proposals” toward realising the vision of a “new capitalism” against the backdrop of a pandemic-hit economy.

To encourage pay hikes, the panel said some subsidy programmes should be contingent on companies agreeing to raise their employees’ wages. Under the current tax break incentive system, companies posting deficits and not paying taxes cannot receive the benefits even if they raise wages.

“Only after distributing (profits) to their employees in the form of wages would consumption expand,” the panel said, adding that should there be a rise in consumption and growth in demand, “corporate profits would further increase, leading to (more economic) growth.”

Other measures proposed by the panel include legislation to set rules for the better use of drones and robots to deliver food and commodities in rural areas with limited means of transportation; attracting high-end semiconductor factories of foreign manufacturers such as those of Taiwan; and promoting innovation by strengthening the science and technology field with a plan to establish a 10-trillion-yen (US$88.6 million) fund for universities by March.

READ: Largest business lobby in Japan calls for more female worker support

Three subordinate committees will be set up soon to work out policy details, according to Kyodo.