Japan Press Weekly

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2013 March 13 - 19 [LABOR]

Use part of internal reserves to implement wage hike: NY University professor emeritus

New York University Professor Emeritus Sato Ryuzo stated that he “strongly supports” the Japanese Communist Party’s call for a portion of corporate internal reserves to be used to implement a wage hike, although he said that the party’s other economic proposals differ from his views.

Sato, who has been an academic in the United States for over 50 years, stated in the Shizuoka Shimbun on March 5 that the long standing proposal for a portion of corporate internal reserves to be utilized for higher salaries by the JCP has been ignored by the Liberal Democratic and Democratic parties.

The following are excerpts from an Akahata interview with Sato.

It is outrageous that Japanese workers’ average wage dropped by 8% in the last 10 years. Business entities, first and foremost, should invest in new equipment. What should come next is to raise employees’ wages. To have prior investments increase productivity, and to raise wages in accordance with the increases in productivity can realize a real wage increase without inviting inflation. Many companies, however, have failed to do so and instead increased their internal reserves because they believe they can reduce risks in that manner.

Corporations are most responsible for the ongoing prolonged recession as they utilize their amassed capital to buy stocks and bonds without making investments, a depart from the genuine goal of corporate activities.

U.S. companies have also amassed enormous amounts of internal reserves since the Lehman Shock, such as Apple Inc.’s 140 billion dollars. Economist Paul Krugman, whom I have a close relationship with, in the New York Times, praised companies which have finally started to use their internal reserves to make investments.

Economic development brings more internal reserves to manufacturers. How companies utilize the money they saved determines if we can witness further economic development.

I submitted my article to the New York Times’ electronic edition on March 9, in which I stated that corporations should properly utilize their money. My view is widely shared in the world of economics.

Related past article:
>Some corporations move to increase wages (March 7, 2013)