© Reuters. FILE PHOTO: Japanese Prime Minister Fumio Kishida speaks at his press conference, after parliament re-elected him prime minister following an election victory last month for his ruling Liberal Democratic Party, in Kantei, Japan on November 10, 2021
By Leika Kihara and Kantaro Komiya
TOKYO (Reuters) – Japanese Prime Minister Fumio Kishida on Friday urged companies whose profits have returned to pre-pandemic levels to raise wages by 3% or more in their union negotiations next spring, with the aim of achieve a virtuous circle of growth and distribution of wealth.
Kishida said at his expert meeting on “new capitalism” that the government will take measures to increase the incomes of social workers such as childcare workers, nurses and caregivers by 3% continuously.
With the recovery of the world’s third-largest economy remaining uneven across sectors, Kishida is committed to helping small businesses pass on raw material, energy and labor costs to their customers.
Kishida has made tackling wealth disparities and the redistribution of wealth a political priority, making wage hike proposals as part of this strategy and helping to relieve consumers of rising oil prices. and food.
“I expect that in next year’s union negotiations, companies whose profits have returned to pre-crown levels will raise wages by 3% or more to revive the new capitalism,” said Kishida at a panel meeting. “The government will do everything possible to prepare an environment conducive to wage increases in the private sector.
Large Japanese companies and unions have agreed to pay increases of 2.18% in 2019, 2% in 2020 and 1.86% this year.
“I want to reverse the downward trend in wage increases,” Kishida added.
It was the first time the government had set a numerical target for companies on the levels of wage increases in four years.
Many companies have kept wage growth low to protect jobs and deal with the effects of the coronavirus pandemic. It was not clear whether companies would respond to a request for a voluntary wage increase even if the proposal was made.
“With increasing economic uncertainty, companies will be quite cautious about rising wages,” said Takumi Tsunoda, senior economist at the Shinkin Central Bank Research Institute.
“It will be quite difficult to achieve a 3% wage increase because the economy is not recovering as strongly as the government had expected. “
Former Prime Minister Shinzo Abe has had no chance to raise wages despite repeated demands on companies to pass on the huge profits they have made from his “Abenomics” stimulus policies.
In last year’s wage negotiations to set wages for 2021, Japanese companies offered the smallest wage increases in eight years as the pandemic hurt corporate profits.
Weak wage growth has been one of the factors preventing the Bank of Japan from meeting its 2% inflation target, as it undermines household purchasing power and discourages businesses from charging more. their products.
As part of efforts to prop up a still stagnant economy, Japan unveiled a record $ 490 billion spending program last week, bucking a global trend to withdraw stimulus measures in crisis mode. .
The package included funding to increase government-set wages for nurses and social workers by 3%.