Japan PM urges ministers to use all tools in new economic package
TOKYO (Kyodo) -- Prime Minister Fumio Kishida on Tuesday instructed his Cabinet ministers to compile a fresh economic package by the end of October, deploying "all possible tools" to mitigate the pain of inflation and support the economy with more pay hikes and investment.
Kishida, who places importance on wealth redistribution, told a Cabinet meeting that the government will "reduce tax and social security burdens on top of providing various benefits," at a time when Japan's fiscal health remains the worst among developed nations.
Ideas:
The Japanese government really can't force Japanese companies to increase wages, as its going to be a voluntary decision on the part of companies.
They might be able to provide some incentives for small and medium-sized companies that that increase wages and provide a series of tax breaks and other strategies as needed to help small and medium-sized companies increase wages.
Wealth redistribution must be a term to describe getting more pay for Japanese workers from companies that for many year has just sat on large sums of money.
Reducing always seems like a good idea for the average Japanese household and even company, but that reduces Japan's current account and maybe even increases the overall debt.
Japan, as it has an aged society, that is getting older every year, can't afford or shouldn't reduce pensions benefits and many on pensions are on fixed incomes and reducing the pensions might be even more stress for the older pensioners.
Article:
He also unveiled plans to review the use of emergency funds budgeted to cope with crises such as the pandemic and divert them for use in promoting sustained wage growth.
The economic package will be funded by a supplementary budget, consisting of five pillars -- easing the pain of inflation on households, spurring more wage growth, increasing investment, addressing challenges posed by the nation's declining population and securing the safety and security of the Japanese people.
Ideas:
Again, sustained wage growth should be voluntary in a market economy, and should not be a burden on companies and much as possible.
But at the same time, companies should understand that they are part of a wider community in the Japanese economy and society and should give their workers, stakeholders, a wage that is not a burden for the workers and should help them with the increases in inflation.
In previous article commentary, the five pillars were talked about and how the Japanese government should address each one.
The only way to get sustained growth, is if companies understand they are part of society and not just in the business to make a profit, but as a responsible member of society they have an obligation to take care of their workers , or are actually stakeholders in the company and society as a whole.
Article:
Specific steps include subsidies to curb rises in gasoline prices and electricity and gas bills and to support small and midsize companies that have lagged behind firms in raising pay and coping with labor shortages. The government will also encourage investment in strategic sectors such as semiconductors.
Kishida said Japan is at a critical phase of shifting from a "cost-cut" economy to one with a virtuous cycle of pay hikes and proactive corporate investment. "We should not let the chance (to make the transition) slip by," he said.
Ideas:
Giving subsides to households, companies, and even wholesalers to bring the energy to Japan should be given to everyone as much as possible. It should not be a one time subsidy payment, but as much as possible a month subsidy until energy prices are significantly reduced.
The Japanese government should give as much support as needed for small and medium-sized companies to increase wages for their workers.
They might be in the giving of tax breaks for those companies who give certain percentage of wage increases, such 3.5% percent or more, as what large companies did in the spring.
And for any company that increases wages more than than the company should get additional tax breaks as an incentive.
Japan has some serious labor shortages and their is no easy solution to solve the crisis. But its been happening or ongoing for a long time, but the Japanese government, and businesses too, hasn't done much about it.
One way is to employ more older workers instead of having mandatory age limits, letting them work as long as they like, as long as they can do the job.
Another way to to employ more women in the workforce and getting more women into higher management positions.
Another way to reduce the labor shortage, which is not very popular in Japan, it to increase immigration from other countries which can greatly help with the labor shortage.
Japan has way behind Taiwan and South Korea in the semiconductor market and may takes decades to re-capture market share in the semiconductor market.
Article:
While details of the spending size have yet to be hammered out, the government plans to draft a supplementary budget for fiscal 2023.
The timing of the economic package has kept speculation alive that Kishida is inching toward dissolving the House of Representatives for a snap election this year. Some within the ruling Liberal Democratic Party are calling for a package worth 15 trillion yen ($101 billion) or more.
Ideas:
As with any country, politics seems to get in the way of actual governing or solving an economies or society problems. Japan is no different as there are competing interests, as always on how and what do to do help society and an economy.
Whatever the Japanese government decides to do its most likely going to increase the debt to GDP ratio, which is already one of the highest among advanced economies.
A budget should have done last year, as inflation as continued to affect Japanese households and companies at record levels.
Article:
"To prevent fiscal discipline from loosening, we will examine each policy item thoroughly so the package will only contain what is truly necessary," Finance Minister Shunichi Suzuki told a press conference.
Surging import costs of energy and raw materials have pushed up Japan's inflation rate, which in turn has prompted Japanese companies to raise wages.
Ideas:
Fiscal discipline is always talked about but in the end, when the final bill is passed, there is much more spending that what was first talked about as competing interests always want to add something that might help their constituents in their districts.
An increase in energy costs and raw materials have been increasing for almost 2 years now, but, for the most part, the Japanese government, and the Bank of Japan, as not really done much about the increased inflation. The have provided some subsidies but are these monthly subsidies or just and one time subsidy.
In the spring only the large companies increase wages of about 3.5% and most small and medium-sized companies didn't increase wages at all.
So there is a lot of room for many companies, if they can, to increase wages and help society.
Article:
The sustainability of such pay hikes is seen as key if Kishida wants to deliver on his pledge to achieve wealth redistribution. For the Bank of Japan, it is also crucial in achieving its stable inflation target.
Some critics say more fiscal spending to stimulate demand will further accelerate inflation, and the recent yen weakness, a byproduct of monetary easing that boosts import prices, is largely to blame.
Ideas:
Again, companies can't be forced to increase wages in a market economy, but they can be persuaded to be good citizens of their communities by providing increases in wages for the good of their workers, stakeholders, and the community at large.
Again, maybe incentives such as tax breaks can be given to companies who give higher than the 3.5% average that big companies gave in the spring. There might be other kinds of incentives that the Japanese government can give as a way to get many companies to increase wages and get sustained economic growth again in the Japanese economy.
Yes, the weak yen is the main reason, or one of the reasons, for the higher import prices in the Japanese economy, as Japan is resource-poor country and has to import much of what it needs every month.
Article:
The inflation rate, as measured by core consumer prices, has remained above the BOJ's 2 percent target in the 17 months to August after it hit a four-decade high of 4.2 percent earlier.
Ideas:
Most central banks prefer to keep inflation between 2 and 4 percent, and they prefer that is a manageable level.
But inflation at 4.2 percent is high for Japan as Japan has been in a de-flation mode for many years.
Inflation might be very much an individual situation, as many for some households or families, inflation might not be that big of deal, but for those on fixed incomes or lower income groups, or even middle-income groups inflation at 4.2 percent might be too much, as they have to cutback on extra spending.
Have a nice day and be safe!
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