© Reuters. FILE PHOTO: People walk past an electric board showing Nikkei index at a business district in Tokyo, Japan December 20, 2022. REUTERS/Kim Kyung-Hoon
By Daniel Leussink
TOKYO (Reuters) – Private sector advisers of Japan’s top economic council on Thursday called on the government to step up talks on how to ensure wages rise faster than inflation, opening the door for a shift way from a decade-long focus on deflation.
The rare move by the advisers, who also called for involving outside experts in the discussions, underscores the government’s struggle to achieve sustainable wage growth that outpaces price rises.
“Wage growth has stayed at just under 2% while prices are rising 3% to 4%,” the four private-sector advisers at the Council on Economic and Fiscal Policy (CEFP) said.
“A lack of demand is continuing due to a deterioration of consumer sentiment among many households,” they said, calling for the talks, which would be about a broad swathe of macroeconomic issues in addition to wage growth, to start from next year.
Similar discussions have not been part of the council’s regular agenda in recent years, a government official said, underlining the rarity of the move.
CEFP, whose 11 members include Prime Minister Fumio Kishida, cabinet ministers, Bank of Japan Governor Haruhiko Kuroda and the four private-sector business representatives and academics, is tasked with determining basic principles for the government including the budget and outlining mid-year economic policy.
The council, established in 2001, came up with initiatives for sweeping changes under reform-minded former Prime Minister Junichiro Koizumi such as privatising the postal system and cleaning up debt in the financial system.
The proposals by the private-sector members form the basis of the government’s long-term economic policy platform.
Japan’s government will consider revising its decade-old blueprint for fighting deflation next year, sources told Reuters earlier this week.
