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Prime Minister Fumio Kishida expressed hope Friday that companies will agree to increase wages by over 3% during shunto wage negotiations next spring.

“I want companies whose earnings have returned to levels before the novel coronavirus pandemic to realize a wage increase of over 3%,” Kishida said during a meeting to discuss his so-called new capitalism initiative at the Prime Minister’s Office.

With the pace of wage growth in Japan slowing in recent years, Kishida aims to realize his signature policy of creating a virtuous circle of economic growth and wealth redistribution by presenting a specific pay hike target, observers said.

This is the first time the government has put forward such a target since the administration of Prime Minister Shinzo Abe requested 3% hikes during the 2018 shunto negotiations.

Still, on Friday Kishida refrained from seeking a uniform pay increase and only expressed “hope” for higher wages in view of widened income gaps between industries amid the coronavirus pandemic.

During the meeting, Kishida said he expects a wage hike drastic enough to usher in the era of new capitalism.

The prime minister also hammered out policies to expand deductions to promote wage hikes through fiscal 2022 tax system reform and increase subsidies to loss-making small and midsize firms paying more to employees.

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