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Japan PM vows to ensure workers’ wage hikes to guard against global inflation -Breaking


© Reuters. FILE PHOTO Fumio Kishida, Japan’s Prime Minister, speaks with media in Tokyo on November 24, 2021. Mandatory credit Kyodo/via REUTERS/File Photograph

TOKYO, Reuters – Fumio Kishhida, the Japanese Prime Minister, pledged Monday that workers would be able to get wage increases through tax breaks. This is to help protect Japan from rising inflation and create a virtuous cycle for economic growth and distribution of wealth.

Kishida pledged the promise on the first day of the extra session, which was convened by parliament to discuss a budget that would record 36 trillion Japanese yen (318 billion dollars) to help cushion the impact from the COVID-19 epidemic.

He announced that he would restore the economy first and then address fiscal reform.

The key to deflation prevention is wage hikes. They reverse a cycle that has seen low wages grow and consumers spending less.

Kishida stated that “as the anxiety grows about rising global inflation having ripple effects on Japan”, he would do his best to ensure wage increases to preserve the Japanese economy.

To encourage sustainable wage growth, it is essential that we create a cycle of wage increase and corporate growth when we push private-sector companies to raise their salaries.

Kishida pledged to make the necessary preparations to assist private-sector companies in increasing wages. He would strengthen taxation and offer bold deductions to firms that increase pay.

Special subsidies will be provided to small businesses that make losses and raise wages, said he.

Kishida, who took office October 1, has put pressure on Japanese companies, asking those whose earnings are back to pre-pandemic levels for a 3% increase in wages.

According to OECD data, wages in Japan have not increased over the last 30 years. Japan’s ‘lost decades’ of slow growth and deflation are evident.

After a strong election victory in October, Kishida has promoted a strategy for “new capitalism”, which targets growth and wealth distribution. This is after eight years’ of Shinzo Abe’s stimulus program “Abenomics” failed to create trickle-down effect in Japan, the third-largest economy in the world.

($1 = 113.2800 yen)

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