Japan Biggest Business Lobby Willing to Compromise on Wage Raise With Government

Japan’s biggest business lobby pledged Friday to contribute to economic recovery through wage hikes if the government ends a special corporate tax surcharge introduced to fund reconstruction following the March 2011 earthquake and tsunami.

The Japan Business Federation’s statement came as Prime Minister Shinzo Abe has long called on business leaders to raise wages, saying the move could create a “virtuous circle” in which growth in corporate profits leads to higher wages and an expansion in consumption that will help to overcome nearly two decades of deflation.

“If the special reconstruction corporate tax is actually abolished earlier than planned, corporate profits would need to be distributed to employees in an appropriate manner,” the business lobby, known as Keidanren, said in the statement.

“Keidanren will make its contribution so that an economic virtuous circle will be achieved as soon as possible through wage hikes,” it said in the statement presented at a meeting involving the government, business leaders and representatives of labor unions.

Welcoming the Keidanren’s commitment, economic and fiscal policy minister Akira Amari said at a press conference after attending the meeting, “A path toward a virtuous circle has become clearer.”

While Amari kept mum about whether Abe’s administration will do away with the special corporate tax surcharge at the end of next March, one year earlier than scheduled, some lawmakers have argued the government should proceed with the de facto tax cut.

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