Japanese Government to Start Wage Increase Talks with Private Companies

As the Japanese government seeks to promote capital investment by private companies, it is also eyeing another way to create an upward economic cycle: teaming up with employers and labor unions to create rules encouraging fluidity in wage levels and employment. Its goal is to spur spending through wage increases.

Officials have expressed high expectations in such negotiations.

“Government-labor-management negotiations included in the growth strategy could form a strategy on a whole new dimension,” one government bureaucrat commented.

In its move, the government referred to the Wassenaar Agreement formed in the Netherlands in the 1980s between the government, employers’ organizations and labor unions after the country fell into an economic slump. Labor unions agreed to accept lower wages in return for stable employment, with the government providing the environment for this to happen. The agreement could be described as a work-sharing policy.

This time, however, the Japanese government is going in the opposite direction. It hopes to have company managers promise to increase wages to a certain degree, and have labor unions accept that employment will become more fluid with a possibility of a temporary increase in unemployment. The government will provide subsidies to support both sides.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza