Japan Press Weekly

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2015 February 4 - 10 [ECONOMY]

‘Abenomics’ induced recession hits smaller companies harder: JCP Shiokawa

Japanese Communist Party parliamentarian Shiokawa Tetsuya on February 4 at a House of Representatives Budget Committee meeting criticized the Abe government’s economic policy for causing the widening gap between large corporations and smaller companies.

Shiokawa pointed out that since the end of the 1990s, while profits and dividends of large corporations have substantially increased, small- and medium- sized enterprises (SMEs) have stagnated. He added that a weaker yen due to the “Abenomics” economic policy helped large corporations export their products but delivered a blow to smaller companies through higher prices of imported raw materials and fuel.

Prime Minister Abe Shinzo admitted that his economic policy brought about adverse effects to SMEs, saying that they are struggling to make profits despite receiving more orders.

Citing a government survey showing that 70% of the SMEs surveyed found it difficult to pass increased costs on to the prices of products, Shiokawa said that this situation became even worse after the government increased the consumption tax rate to 8% in April last year. He quoted a manager of a Toyota subsidiary as saying that the company is in no position to ask for a higher price from its parent company.

The JCP lawmaker condemned the Abe government for considering offering a tax cut that benefits only affluent companies. He demanded that the government urge large corporations to use a part of their internal reserves to increase workers’ wages and to pay higher prices to their subsidiaries.