Wage hikes will be sustainable for businesses: Japanese PM

To curb inflation, Japanese Prime Minister Fumio Kishida is continuing to push for a surge of wage hikes, vowing to make them sustainable and broader to cushion the inflation hitting Japanese households.

“The economy’s energy comes from pay rises,” Kishida said. “We must make the great wave of pay rises sustainable and spread it to the regions as well as to small and medium-sized businesses.”

Kishida said this during the biennial convention of Japan’s confederation of labour unions, commonly known as Rengo, which represents mostly full-time salaried employees, whose pay increases have not kept pace with inflation. In contrast, wages for contract and part-time workers have risen faster, even from a low base.

Main breadwinners of households are feeling the strain of economic inflation, with real incomes down 2% since Kishida became Prime Minister two years ago, according to the government’s most recent household survey.

The Bank of Japan is also watching wage trends closely as a key factor in whether inflation will reach its target level in a sustainable manner, reported the Straits Times.

Earlier this year, Kishida’s government released a draft economic and fiscal policy blueprint for fiscal 2023.

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The blueprint highlighted the government’s drive to achieve economic growth supported by wage hikes and wealth distribution at a time when a growing number of companies are raising salaries to keep pace with accelerating inflation.

To support companies in offering higher salaries, the draft plan also calls for more investment in human resources development and labour market reform.