In line with Prime Minister Shinzo Abe’s campaign to break the grip of deflation through aggressive economic policies, business leaders on Tuesday called on companies to hike wages.
“We have asked member companies to raise wages to realize a virtuous cycle of the economy,” Keidanren Chairman Hiromasa Yonekura said at a news conference at a Tokyo hotel attended by the heads of two other business lobbies.
Yonekura said a positive cycle, with improved earnings, capital spending, expanded employment and finally wage hikes, will lead to further consumption and economic recovery.
“As a corporate manager, raising employees’ wages is always in my mind in order to reward their efforts,” Yonekura added.
Abe pledged Monday at his first news conference of the year to strengthen efforts to bring the country out of 15 years of deflation and to achieve a “virtuous cycle of the economy as well as higher incomes” for households through additional stimulus measures, including a ¥5.5 trillion supplementary budget.
Yasuchika Hasegawa, head of the Japan Association of Corporate Executives, said it would be difficult to get the country back on the path to growth if the current opportunity under Abe’s guidance is missed.
Abe’s economic policies, dubbed “Abenomics,” feature radical monetary easing, public works spending and growth strategies to encourage private investment.
“Now is the time to think about the wage hikes,” Hasegawa said. “I’d like companies to cooperate with the efforts to generate a positive impact for the economy,” he said.
Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, noted that companies of all sizes and various regions must first feel the positive effects of economic growth before they can raise wages.
Meanwhile, Yonekura predicted that the government’s stimulus measures should blunt the impact of the consumption tax hike to 8 percent in April.
At a gathering of some 1,850 business executives before the news conference, Lawson Inc. President Takeshi Niinami said wage hikes are essential to enhance consumption.
“I think regular pay raises in years to come will lead to further consumption, especially for the younger generations,” he said. Niinami added that he predicts the nation will see the end of deflation this year, creating the environment for wage hikes.