“The biggest challenge for the Japanese economy is the lack of wage growth. If wages don’t rise, consumption won’t pick up and businesses won’t increase their investment,” Kihara said at the conference. a television show.
Although it is up to companies to decide how much to raise their wages, the government can help secure higher wages through tax incentives, Kihara said. The government can also encourage companies to disclose more information on how much they spend on human resources, he added.
These remarks echo those of the Governor of the Bank of Japan (BOJ), Haruhiko Kuroda, who stressed that obtaining higher wages would be crucial for the economy to sustainably reach its inflation target of 2%, thanks to a strong domestic demand.
“The government will focus more on achieving wage growth. This is particularly important as prices rise,” Kihara said.
Prime Minister Fumio Kishida’s administration has seen its popularity plummet in part due to concerns about the rising cost of living, with the recent sharp falls in the yen pushing up the cost of importing already expensive raw materials .
The government’s concern over the side effects of the BOJ’s economic stimulus policy on the weaker yen was partly behind the BOJ’s surprise decision earlier this month to change its bond yield monitoring. bonds and allow long-term interest rates to rise further, sources told Archyde.com.
Consumer price inflation in Japan hit the highest level in four decades at 3.7% in November, well above the BOJ’s target, hitting households that have yet to see their salaries rise enough to compensate for the soaring prices of consumer goods.