Prime Minister Shinzo Abe once again on Tuesday urged business leaders to raise wages this year to help get the economy out of more than a decade of deflation.
Speaking at a New Year’s celebration organized by three major business lobby groups, Abe said his administration’s plan to lower the corporate tax rate should help create room for companies to offer higher salaries.
The ruling coalition decided in late December to reduce the effective corporate income tax rate of 34.62 percent to 32.11 percent in fiscal 2015, and to 31.33 percent in fiscal 2016.
“We’d like to aim for further cuts in the future,” Abe said, adding the possibility of an additional reduction “hinges on everyone here.”
He said the administration will consider further reductions if the 2.51 percentage-point cut in the fiscal year starting in April helps lift wages, spurs capital spending, strengthens companies’ competitive edge and improves employment.
Many corporate executives expressed willingness to accept pay hikes in the annual wage talks this spring, but others say it will be difficult.
Hisao Tanaka, president of Toshiba Corp., told reporters at the celebration that it is “100 percent” possible that his company will approve pay raises.
Toshiba expects solid growth in the current business year through March thanks to increasing sales in its energy system, infrastructure and business equipment divisions.
But Yasushi Kimura, chairman of JX Nippon Oil & Energy Corp., said “a virtuous cycle of the economy hasn’t begun,” and is “very tough” to boost profits in such a difficult economic environment.
The recent plunge in oil prices has taken a heavy toll on Japanese oil refiners, lowering the value of their inventories.
The celebration was organized by Keidanren, the Japan Chamber of Commerce and Industry, and the Japan Association of Corporate Executives (Keizai Doyukai).