- Policy maverick repeats call for BOJ to strive to CPI goal
- Wage stagnation is one of greatest challenges to Abenomics
Kozo Yamamoto hasn’t wasted any time pushing his policy prescriptions since Japanese Prime Minister Shinzo Abe brought him into cabinet on Wednesday.
"I think it might be necessary to encourage a discussion throughout all ministries about a wage target policy," Yamamoto told reporters in Tokyo on Thursday morning. The veteran lawmaker, whose formal job description is minister responsible for regional revitalization, has made it clear he won’t be tied down with a narrow focus.
In a press briefing that also covered agricultural competitiveness, jobs and incomes in regional areas, Yamamoto spoke repeatedly about the Bank of Japan. It must strive to meet its 2 percent inflation target as soon as possible, and it has policies at hand to stoke price gains to 1.5 percent-plus by the middle of next fiscal year, he said.
In pushing the notion of targeting specific increases in wages, Yamamoto, 67, is taking on one the key failings of Abenomics to date. Stagnation in wages is holding back household spending in Japan and undercutting efforts to generate the kind of steady gains in consumer prices needed for a healthy and expanding economy.
How much influence he will have remains to be seen, but his role hosting study groups and prodding the boundaries of debate have already helped shape Abe’s economic policy.
While Japan’s unemployment rate is just 3.1 percent, and the number of job advertisements outnumbers applicants, there is little pressure for higher incomes.
An increasing number of workers are employed on part-time and temporary contracts, and have little bargaining power. Meanwhile, many of those in regular, permanent positions are focused on maintaining their job security rather than agitating for pay rises.
The latest figures for labor cash earnings are scheduled to be released Friday, with estimates pointing to a 0.3 percent increase in June from a year ago. This follows a 0.1 percent drop in May and no change at all in April.