Japan’s government presents an economic action plan for a „new capitalism.”

By Tetsushi Kajimoto

TOKYO, June 6 (Reuters) – Japanese Prime Minister Fumio Kishida’s government on Tuesday presented an action plan for its „new capitalism” plan, which it hopes will increase growth and wealth distribution through wage increases, signaling its commitment to transform the economy. In high gear.

Kishida’s economic strategy will focus on investment in human resources, science and technology, innovation and start-ups, green and digital transformation as key drivers of growth.

Kishida’s cabinet is expected to approve a mid-year economic policy framework and action plan later this month.

Some Japanese parliamentarians have speculated that the prime minister will hold an early election to confirm his position.

While the ruling Liberal Democratic Party (LDP) and its smaller ally Komeito are unlikely to lose to the disorganized opposition, a weak result in the polls could cost Kishida his job.

„With wages at their highest level in 30 years and reasserting appetite for investment, forces have been building in recent years to break the vicious cycle,” the action plan’s summary says.

In wage negotiations this year, Japanese companies offered annual wage increases of more than 3%, responding to the need to attract workers against a backdrop of high inflation and labor shortages.

The Kishida government is pushing Japanese companies to promote a higher wage environment and make the labor market more flexible. The government plan calls for the minimum wage to be 961 yen today to reach the national average of 1,000 yen this year.

Among other initiatives, it also calls for public spending on green and digital transformation to act as a catalyst for private sector investment.

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(Reporting by Tetsushi Kajimoto; Editing by Sri Navaratnam; Editing in Spanish by Dario Fernandez)

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