Japan business lobby throws weight behind PM Abe’s wage hike plan

TOKYO (Reuters) – The head of Japan’s largest business lobby on Thursday backed the prime minister’s plan for companies to raise wages by 3 percent next year, boosting the chance that household spending will drive up consumer prices.

Wages at big companies have been rising slightly more than 2 percent each year since 2014, government data shows, and an increase of 3 percent or more next year would help the Bank of Japan to reach its inflation target.

“The business community realizes that society demands higher wages, so we want to take more aggressive steps to raise wages,” a government official quoted Sadayuki Sakakibara, chairman of the Keidanren business lobby, as telling a meeting of the government’s top advisory panel.

At the meeting, Prime Minister Shinzo Abe laid out a plan to encourage companies to raise wages and spend more money on capital expenditure with tax breaks.

The push for higher wages is an important part of Abe’s economic agenda, which has strong public support following his ruling coalition’s comfortable victory in parliamentary elections on Oct. 22.

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