In a symbolic gesture, the government and leaders of business lobbies and labor unions Friday agreed to work together on raising salaries — a critical development that must take place for Prime Minister Shinzo Abe’s deflation-busting “Abenomics” policy to succeed.
“We will lead an expansion in business earnings to wage increases,” they said in an agreement signed at a joint meeting. Abe welcomed the “shared awareness” and urged the groups to “boldly put it into action.”
It is rare for big government, corporate executives and labor unions to ink a written accord.
“I will ask companies to aggressively allocate to employees the outcomes of economic expansion,” Hiromasa Yonekura, chief of the nation’s biggest business lobby, Keidanren, told reporters after the meeting at the prime minister’s office, suggesting he will pressure other employers to raise salaries instead of retaining earnings.
Nobuaki Koga, head of the Japanese Trade Union Confederation (Rengo), attended the meeting but doubted the deal would solve every problem with Abenomics immediately.
“I don’t think all conditions are set. We must make steady efforts in negotiating” with the employers, Koga said. The annual wage talks begin early next year.
To end nearly two decades of deflation in Japan, Abe is asking companies to raise salaries in exchange for government stimulus, tax breaks and deregulation to encourage business investment and consumer spending.
The government is eager to offset the first stage of the doubling of the sales tax next April, when it will rise to 8 percent from 5 percent. The hike will dampen both household and corporate capital spending.
Abe said Friday’s agreement showed that his government is “able to lay down a firm foundation to realize a virtuous economic cycle” and was hopeful that wage increases will underpin consumption and promote corporate investment.