Public Policy Planning & Consulting Co. (SEISAKU-KOUBOU) is a public policy consulting firm based in Tokyo, covering broad policy areas such as economic policy, fiscal policy, regulatory policy, administrative reform, international trade and investment, etc.
PPPC provides consulting and briefing services to the clients in the central/local governments, Diet, local assemblies and the private sector.

This blog is aimed at providing general information, latest updates and some of our analytical reports about Japan's public policy in English.
The contents include;
- updates on some important government councils, especially those in which our executive officers serve as the members,
- weekly reports on latest news in Nagata-cho, the political center in Japan, (partially).
- analytical reports and articles by our members and distinguished experts outside the firm,(partially).


Government Frankly Urging a Wage-Increase!?

* Written by Yoichi TAKAHASHI, PPPC Chairman / Kaetsu University Professor

 The economic and fiscal policy minister Akira Amari said we want to
make an environment in which companies would be embarrassed if they
didnt raise the wages even though their profits are rising. To me,
it raised a question whether the central government should pressure
private companies to raise wages in such a straightforward manner.

 Lets look at Amaris statement from two perspectives; political
and economic. First, from a political point of view, Amaris remark
scores almost perfect. All Amari said was what the labor unions should
have voiced strongly. Needless to say, a controller of the labor
unions is Rengo, the main supporter group of the opposition Democratic
Party of Japan. Since Amari only said what DPJ should have said on
behalf of Rengo from the ruling side, it was like beating DPJ at its
own game as a political strategy.

 From the beginning, although the monetary policy is recognized as an
employment policy in the western countries as it lessens unemployment
rates, the former DPJ government never attempted to consider its
utilization to increase employments. So it was obviously a political
defeat of DPJ when Prime Minister Shinzo Abe started mentioning the
relaxing monetary policy as soon as Liberal Democratic Party came back
to power. Perhaps, Rengo should have supported Abe Cabinet from the
beginning as it cares about the employment instead of DPJ which didn
t do anything. Amaris comment, touching a sore spot of DPJ and Rengo,
was a fitting one from a political viewpoint.

 However, Amaris remark is a failure looking from an economic
perspective. The monetary policy is helpful in terms of employment,
indeed, but its effect will usually be visible only after two years or
so. As it was this April when the Bank of Japan took the drastic
relaxing monetary policy, its policy effects will be observable from
around April two years later. Meanwhile, the Cabinet schedules to
raise the consumption tax rate from next April, and its negative
impacts on the national economy will be evident immediately. While the
Cabinet seeks to mitigate possible negative impacts of the tax-hike by
a 5 trillion yen of economic stimulus package, the amount of
government revenue expectedly increasing from the next fiscal year by
the tax-hike is some 8 trillion yen; further, the economic stimulus is
a temporary one for the fiscal year while the tax-hike will last ever.
Therefore, the private companies cannot help being cautious on raising
salaries of the employees because they cannot be opportunistic about
the socioeconomic prospects.

 To summarize, while effects of Abes first arrow monetary policy
is yet to be seen, Abes second arrow fiscal policy entailed just
5 trillion yen, amounting to only a half of the 10 trillion yen of
supplementary budget compiled this January and 5 trillion minus of the
last years economic package. Plus, the government officially
announced to impose more 8 trillion yen by the tax-hike.
 Many companies would probably like to request the government to
suspend the tax-hike which will likely bring unrests to the future of
society if the government demands them to raise salaries in an

 A few words for the minister Amari: please stop having an easygoing
idea that the situation could be handled by a little bit of corporate
tax cuts despite that you are raising the sales tax. It is more
embarrassing to raise the tax before the country eradicates deflation
and the companies find it easy to raise salaries of the employees 
given visible positive effects of the Abenomics.

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