Japanese Prime Minister Fumio Kishida’s administration has revealed a detailed action plan for his ‘new capitalism’ initiative, which aims to boost economic growth and address wealth inequality through wage increases.
The plan emphasizes investment in key areas such as human resources, science and technology, innovation, start-ups, and green and digital transformation.
The action plan and a separate mid-year economic policy framework are expected to receive approval from Kishida’s cabinet later this month.
Speculation is mounting that the prime minister might call for a snap election to solidify his position. However, the ruling Liberal Democratic Party (LDP) and its ally Komeito are considered strong contenders against disorganized opposition parties. A poor performance in the election could jeopardize Kishida’s leadership.
This positive trend is expected to break the cycle of economic stagnation seen in previous years.
Japanese companies, cautious due to high inflation and labor shortages, have offered annual wage hikes exceeding 3% during wage negotiations this year to attract and retain workers.
The plan also calls for an increase in minimum wages to reach the national average of 1,000 yen this year, up from the current 961 yen.
The government aims to promote private-sector investment by strategically allocating funds to green and digital transformation initiatives. These targeted investments are expected to act as catalysts for economic growth.