TOKYO, Jan. 24, 2024—This is a country of schizophrenia: Businesses and labor leaders say prices are spiraling higher again so they need to form a united front to raise worker wages further, and the central bank thinks the country is still muddied in deflation so it needs to continue zero interest rate policy.
In 2023, labor wages rose 3.58 percent in nominal terms, the steepest rise in 30 years, while government data-based CPI was estimated to have risen about 4 percent, about the same as in 2022. Headline inflation that consumers feel climbed double digit in 2022 and 2023, the reason why workers complain that their paychecks had slimmed down.
On Jan. 24, 2024, a top business lobby, Nippon Keidanren, and labor representatives led by the largest union federation Rengo met in Tokyo. The Keidanren chair, Masakazu Tokura, said in a video message to the meeting that he supports wage increases exceeding inflation. Rengo is demanding no less than 5 percent, the level that Keidanren doesn’t spurn outright.
So both sides want another bout of inflation, making it the third consecutive year of price increases, which consumers say have risen by 30-50 percent, far higher than they earn, thus the business-labor confirmation about spiraling prices and for a further rise for employers to earn more yen and workers to be paid more.
Arbitrarily, the central bank Jan. 23 released a statement that reiterated that Japan is still not out of the deflationary woods so the bank needs to continue its zero to minus interest rate policy.
What may sound contradictory is actually orchestrated methodically for big businesses, which are represented by Nippon Keidanren, and Rengo and other major labor lobbies that represent workers at large-scale employers. Slipping off the employer-labor lobby campaign are small businesses and their workers. Both are struggling under price rises they buy from leading manufacturers and service providers and retailers.
And where’s the prime minister (Fumio Kishida is his name?) who supposedly is charged to support the weak and in need? He is busy putting back the spilled beans hidden under his and other lawmakers’ chairs.
So the Japanese are threatened by another bout of inflation this year.
###