By Leika Kihara
TOKYO (Reuters) – Japanese policymakers are stepping up calls to raise the country’s minimum wage as part of a strategy to ensure households can boost consumption and revitalise the economy when COVID-19 curbs are removed and vaccines are rolled out.
Finance Minister Taro Aso said on Wednesday it was hard to revitalise the economy with monetary easing alone, calling on companies to help out by raising salaries for employees.
“We have to prod companies to transfer more of their profits to households by raising salaries. Otherwise we won’t see consumption fire up,” Aso told parliament.
“We must seek to raise Japan’s minimum wage to around 1,000 yen ($9) from the current average of about 900 yen,” he said.
The remarks echo those of Prime Minister Yoshihide Suga, who said on Monday the government will aim to raise the average minimum wage to 1,000 yen “swiftly” to help improve living conditions for temporary workers hit hardest by the pandemic.
Raising the minimum wage, particularly those for regional areas where wages are lower than bigger cities, will likely be among key topics of debate at the government’s top economic council. The council will come up with an outline of its long-term economic strategy around the middle of this year.
Japan’s economy rebounded from the pandemic’s initial hit thanks to robust exports. But it is likely to have shrunk in the current quarter due to soft consumption, even though new state of emergency curbs imposed in January have been lifted.
Many policymakers expect the post-pandemic recovery to be modest in Japan, with some analysts warning of the risk of a return to deflation if the weakness in consumption persists.
Raising the minimum wage could be controversial. While it will give wage-earners more money to spend, it will hit small, regional firms barely staying afloat from the pandemic’s hit.
Speaking at the same parliament session, Bank of Japan Governor Haruhiko Kuroda pledged to maintain its “powerful” monetary easing with policy tools made more sustainable with a review conducted on Friday.
“It will take time for inflation to accelerate, given Japan’s long experience with deflation,” Kuroda said.
($1 = 108.5200 yen)
(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Michael Perry)
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