Prime Minister Shinzo Abe's cuts to local-government subsidies are like trying to "wring water from an old rag that's been squeezed dry," says Kazuya Yoshida, a 27-year municipal employee in Shijonawate, Osaka Prefecture.
Abe pared payments to regional authorities by ¥392 billion, or 2.3 percent, deepening decade-long cutbacks for city and prefectural budgets hurt by falling populations and dwindling revenues. While Abe has deployed fiscal stimulus at the national level to revive the economy, a drop in wages for local civil servants risks prolonging deflation.
"Where on Earth can we find benefits from " 'Abenomics?' " asked Yoshida, 50, who manages disaster prevention in the Osaka suburb. "We're increasingly worried about our household budget. The Abe administration doesn't understand what's actually going on" in the local economies, he said.