Airy fairy

8 Jan 2014 By Andy Mukherjee

The Japanese prime minister argues a new national consensus on boosting workers’ pay will help to fire up the economy. He’s being too optimistic. Tough labour reforms are needed to reverse a 15-year slide in Japanese wages. But those don’t seem to be Abe’s priority.

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The future of Japan’s economy “will become even brighter with the appearance of what we are calling the wage surprise,” Prime Minister Shinzo Abe wrote in a Jan. 6 op-ed published by Project Syndicate.

He said the government, business and labour leaders had been in intensive discussions about “setting in motion an upward, virtuous cycle whereby increased wages lead to more robust growth”.

Annual wages of Japan’s workers have fallen by 34.3 trillion yen since 1997, “an amount larger than the annual GDP of Denmark, Malaysia, or Singapore,” Abe wrote, adding that “only when this trend is reversed can Japan’s economy resume a long-term upward trajectory.”

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