Japan's chief cabinet secretary calls for broad-based wage hikes
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[July 23, 2024] By
Yukiko Toyoda and Kentaro Sugiyama
TOKYO (Reuters) - Broadening pay hikes among smaller firms is crucial,
said Japan's top government spokesperson, Yoshimasa Hayashi,
underscoring the administration's drive to achieve sustained wage gains.
Such gains have been a policy priority for Prime Minister Fumio
Kishida's government, in its effort to prevent rising living costs from
hurting consumption and derailing a fragile economic recovery.
Hayashi's remark came in a Reuters NEXT Newsmaker interview ahead of the
Bank of Japan's policy meeting on July 30 and 31, when the board is
likely to discuss whether conditions allow it to lift interest rates
from current levels near zero.
It was crucial for Japan to achieve a "positive" cycle in which firms
can pass on higher costs through price hikes, so that they can earn
enough to keep raising pay, Hayashi added.
"We expect the Bank of Japan to decide specific monetary policy with an
eye on what's happening in the economy, and through close dialogue with
markets," Hayashi, who is the chief cabinet secretary, said on Friday.
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"What's important is for a positive cycle to spread a bit more among
smaller firms," he said, when asked about the expectations of some
market players that the central bank could raise interest rates this
month.
The government may compile a fresh fiscal stimulus package later this
year to cushion the blow to households if inflation rises further,
Hayashi added, with the size of spending to hinge on economic conditions
in coming months.
In a shift away from a decade-long program of radical stimulus, the Bank
of Japan (BOJ) exited negative interest rates and bond yield control in
March. Markets are warming to the idea of a rate hike at this month's
policy meeting.
BOJ Governor Kazuo Ueda has signalled the bank's readiness to hike rates
if there is sufficient evidence that wage hikes will broaden, and keep
inflation durably around its 2% target.
While big firms have offered bumper pay hikes in annual wage
negotiations this year, it is unclear whether their smaller counterparts
can keep up.
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![](../images/072324PIX/busine80.jpg)
Japan's Chief Cabinet Secretary Yoshimasa Hayashi speaks during an
interview with Reuters in Tokyo, Japan July 19, 2024. REUTERS/Kim
Kyung-Hoon
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Asked about recent yen declines and their impact on the economy,
Hayashi said it was desirable for currency rates to move in a way
that reflected fundamentals, but declined to comment on whether
recent levels were out of line with them.
The yen has fallen more than 10% against the dollar this year to
languish around 38-year lows, weighed down by the wide difference in
interest rates between the U.S. and Japan.
Tokyo is suspected to have stepped into the market this month to
prop up the yen, which has hovered around 157.50 to the dollar,
after touching a six-week high of 155.375 last week in the wake of
suspected intervention.
Hayashi said he saw no immediate need to revise a joint statement
between the government and the BOJ in 2013 that commits the central
bank to meeting its inflation target of 2% "at the earliest date
possible".
The joint statement served as the backbone of former BOJ governor
Haruhiko Kuroda's radical monetary stimulus and justification for
keeping Japan's interest rates ultra-low.
Critics have said its focus on the need to beat deflation has become
outdated at a time when Japan has faced inflation exceeding the
BOJ's 2% price target for more than two years.
(Reporting by Yukiko Toyoda and Kentaro Sugiyama; Writing by Leika
Kihara; Editing by Clarence Fernandez)
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