Japan’s government plans to raise the minimum wage and introduce other steps to revitalise the economy, but the draft of stimulus measures seen by Reuters on Monday appeared to break no new ground on reforms that analysts say are needed to end decades of stagnation.
Prime Minister Shinzo Abe’s government will also offer some financial support to people living off their pensions to bolster consumer spending, a copy of the draft obtained by Reuters showed.
Citing unnamed sources, the Nikkei newspaper said on Monday that the government is planning to raise the minimum wage by 3.0 per cent. But the draft didn’t provide any specifics and analysts say the government will need to do more to foster durable growth.
Raising wages is an urgent task for policy makers as Tokyo is keen to ramp up consumer spending, which is seen as crucial to boosting domestic demand and pulling the economy out of 15 years of deflation.
However, some economists remained sceptical of the plans because they do not do enough to address Japan’s rigid labour market and low worker productivity.
"This sounds like short-term stimulus, but Japan needs structural reforms more than stimulus measures," said Marcel Thieliant, Japan economist at Capital Economics in Singapore.
"We might get a growth spurt for the next one to two years, but this will not lead to stronger growth in the long term."
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