Japan should work on the wage growth to help citizen face the ongoing inflation, said the Japanese Prime Minister Fumio Kishida.
Wage growth has been very slow in Japan despite the government’s continuous pressure on companies to raise their employees’ pay, according to Reuters.
The government is currently focusing on wage hikes to help encourage the private consumption, which is more than half of the economy.
This came under the PM’s new capitalism agenda to help spark positive economic growth and wealth distribution.
“Above all, wage hikes that beat price hikes are needed,” said Kishida during Liberal Democratic Party (LDP) to lay out the agenda for this year.
Kishida also talked about the labour shortages saying: “the wave of wage hikes must spread to small firms and local areas to enhance competitiveness amid heated competition to attract workers.”
The Prime Minister also guaranteed to keep on taking steps to control energy and food prices to ease the pressure the inflation has on households.
Masakazu Tokura, the head of one of Japan’s biggest business Keidanren said that he supports the Prime Minister’s call for wage push.
He also commented saying “now is the crucial stage to revive a strong economy,” further remarking that these wage hikes are vital.
There is a prediction that large firms will offer the biggest pay hikes in 26 years, according to the Japan Economic Research Center (JERC).
However, the rate offered will most probably fall victim to the continuous inflation which is running at 4.2 percent.
Japanese business owner, economists, and officials all said that small companies might face a difficulty in increasing the pay.
