Japanese government official denies reports prime minister calls for 3% pay hike next year

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 , November 10, 2021. Stanislav Kogiku / Pool via REUTERS

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  • Kishida will make a proposal to Friday’s panel, according to Kyodo
  • Government official denies Kishida will demand such pay rise
  • Uncertainty remains as to whether companies will heed any demand
  • Prime Minister’s agenda focuses on wealth redistribution

TOKYO, Nov.26 (Reuters) – A Japanese government official has denied media reports that Prime Minister Fumio Kishida is proposing to the corporate sector to raise wages by around 3% in annual wage negotiations for the year next.

The proposal was reported by Kyodo News Agency and other outlets, which said Kishida would present it to a government panel on Friday.

But a government official involved in organizing the panel denied the information, saying Kishida would not make such a proposal. The official spoke on condition of anonymity as he was not authorized to speak publicly.

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Kishida has made the fight against wealth disparities and its redistribution a political priority. Kyodo said the proposed wage hike would be part of that strategy and help relieve consumers of rising oil and food prices.

It would be the first time the government has 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. Read more

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. . Read more

The package included funding to increase government-set wages for nurses and social workers by 3%.

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Reporting by Leika Kihara and Kantaro Komiya; Additional reporting by Daniel Leussink; Editing by Chang-Ran Kim, Nick Zieminski, Sam Holmes and Ana Nicolaci da Costa

Our Standards: Thomson Reuters Trust Principles.

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