Japan wants its workers to get inflation-busting pay rises


Tokyo
CNN

Japan is struggling with falling wages, even as the cost of living continues to rise.

The world’s third-largest economy reported its slowest drop in real wages in more than eight years on Friday, a day after its leaders asked companies to raise workers’ wages in higher than inflation.

Japan saw a 3.8% annual drop in inflation-adjusted wages in November, data released by the Ministry of Health, Labor and Welfare showed. This was the biggest drop since May 2014, when the consumption tax hike was reduced by 4.1%, according to data released by the ministry.

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The latest declines came as Japanese Prime Minister Fumio Kishida urged his bosses to speed up job increases, warning that the economy could fall into stagflation if wages continue to rise on the back of inflation. the price. Stagflation describes a period of high inflation and stagnant economic growth, which erodes people’s purchasing power.

“The basis of a good economic cycle is wage growth, and it must be achieved by all means. “Companies must generate profits and then distribute them to workers appropriately,” Kishida said Thursday at a New Year’s meeting organized by Japan’s three main lobbyists. “Consumption will increase, investment will increase and economic growth will be promoted.”

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A basic goal of Kishida’s administration is to raise wages by 3% or more every year. The prime minister, who will take office in late 2021, noted that while the company’s profits have increased over the past 30 years, wages have not kept pace with that growth.

Japan’s largest labor union, known as Rengo or the Confederation of Japan Trade Unions, is now demanding a 5% wage increase in talks with various company managers this year. this, Kishida added.

Wages in Japan have hovered around the same level for the past decade, according to the latest data released by the Organization for Economic Co-operation and Development (OECD). Meanwhile, average wages in many other countries have risen over the same period, OECD data show.

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Rising commodity prices and a weak yen are prompting companies to pass on higher cash to buyers at the fastest pace in decades in Japan.

The country’s core consumer prices, excluding fresh food, rose 3.7% in November from a year earlier. This was the highest increase since December 1981, according to a December report by the Daiwa Research Institute.

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