Japan Press Weekly

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2013 October 16 - 22 TOP3 [POLITICS]

Abe’s measure for wage increase will have no effect

Akahata editorial (excerpts)

Prime Minister Abe Shinzo repeatedly said in the Diet that he will work hard to create a cycle in which growth in corporate profits leads to growth in wages and jobs. However, ordinary people know that even if corporations earn more, they will not raise workers’ salaries. According to a recent opinion poll by NHK, only 11% of respondents think Abe’s economic policy will lead to wage hikes, while 46% think it will not.

To increase wages and opportunities for stable jobs are the keys to recovering from the deflationary recession as the prime minister himself admitted in the September meeting of the government, labor, and management. But what Abe proposes to achieve that is a cut in corporation taxes.

The government lowered the corporate tax rate by 7.5% between 1997 and 2012, and the average income of workers decreased by 700,000 yen during the same period of time.

PM Abe plans to end the special corporate tax for reconstruction following the 3.11 disaster on a groundless assumption that that will encourage companies to increase wages. Reuters in September and October surveyed corporations in Japan, asking what they will use the money saved by the planned tax reduction. The survey result revealed that only 5% of respondents said they will use the money to increase wages, another 5% mentioned creating more jobs, and 30% said they will keep the money in internal reserves.

If the prime minister wants to push companies to increase wages, he should squarely demand that the business world use at least a part of their 270 trillion yen of corporate internal reserves for wage increases. Around 80% of large corporations can offer a salary increase of 10,000 yen a month to their employees by using only 1% of their internal reserves.

According to a public survey by the Jiji Press, 76.4% think that the economy is still stagnant. It shows that Abe’s economic policy has failed to improve the lives of the general public. The prime minister should listen to the people’s voices, give up his plan to further cut the corporate tax rate, and take measures to boost people’s income.