Japan’s Prime Minister Pledges to Escalate Household Income through Every Possible Measure
Published on: January 30, 2024.
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Japanese Prime Minister Fumio Kishida has made a commitment to prioritize real income growth in order to combat deflation. In a policy speech to the lower house plenary at the start of the regular parliament sessions, Kishida emphasized the importance of revitalizing the economy and addressing urgent issues such as wage hikes.
Despite not announcing any new policies, Kishida acknowledged the need to restore public trust in politics, particularly in light of a funding scandal that has impacted support for his ruling Liberal Democratic Party (LDP).
The focus for this year’s spring wage talks between employers and workers is achieving sustainable wage growth and stable inflation. The outcome of these talks could potentially lead to a departure from the Bank of Japan’s unconventional monetary stimulus.
In 2021, major Japanese companies offered a 3.6% wage hike, the highest in thirty years. Economists predict that this year’s wage hikes could surpass that figure at nearly 3.9%, driven by a labor shortage and a corporate cash pile of 343 trillion yen ($2.33 trillion). However, smaller firms have been slower to implement significant wage increases compared to their larger counterparts.
Market analysts are closely monitoring the correlation between the end of deflation and the possible policy change by the Bank of Japan. While Japan is no longer in deflation, authorities remain cautious due to the risk of price declines returning.
Kishida highlighted the government’s efforts to increase minimum wages and raise pay for public-sector workers, including those in medical and welfare services, truck drivers, and non-regular workers. In addition to wage hikes, temporary cuts in income and resident taxes of 40,000 yen ($269.96) per individual will be available from June, boosting disposable income.
The Prime Minister emphasized the need for fiscal reform, with Finance Minister Shunichi Suzuki echoing the sentiment. Suzuki acknowledged that Japan’s fiscal situation will become more challenging due to the COVID-19 pandemic and rising inflation. The government plans to issue government bonds (JGBs) worth approximately 182 trillion yen for the fiscal year ending in March 2025. To secure market confidence and ensure fiscal sustainability, fiscal reform will be pursued with the aim of achieving a primary budget surplus by fiscal 2025.
Source: [The Financial Express](https://thefinancialexpress.com.bd)
