Why Even a 40% Tax Break Won’t Move Japan’s Employers to Raise Pay

The country’s prime minister says lifting long-stagnant wages would jump-start the sputtering economy. Companies call the plan a nonstarter.

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Ben Dooley
Hisako Ueno

By Ben Dooley and Hisako UenoDec. 23, 2021, 5:00 a.m. ET

“TOKYO — Over the last two years, Masataka Yoshimura has poured money into the custom-suit business his family founded more than a century ago. He has upgraded his factory, installed automated inventory management systems and retrained workers who have been replaced by software and robots.

Japan’s prime minister, however, wants him to do one more thing: Give his employees a substantial raise.

The reasoning is simple. Wage growth has been stagnant for decades in Japan, the wealth gap is widening and the quickest fix is nudging people like Mr. Yoshimura to pay their employees more. Higher wages, the thinking goes, will jump-start consumer spending and lift Japan’s sputtering economy.

But raises are a nonstarter for Mr. Yoshimura. Increasing wages would be “truly fatal,” he said last week from his office at Yoshimura & Sons in Tokyo. And he is far from alone in his thinking. Business groups, union leaders and others have questioned the feasibility of a plan by Prime Minister Fumio Kishida to offer sizable tax deductions to companies that raise pay.”

David Lindsay: I would focus on raising the wages of the 37% of the work force which is temporary, and 70% women

Here is a comment I recommended:

MMichaelOttawa21m ago

@Daniel Mozes Japan’s long-term future will be better than America’s. Their restrictive immigration policies may curtail their short-term growth, but in the long run, Japan will prove to be a more environmentally sound country because isn’t continually increasing its population. The world needs to stop this Ponzi scheme that population growth is essential for economic growth; rather, we should be lowering our excessive consumption rates and learn to live with less. Japan is doing what every other country should be doing.In Reply to Daniel Mozes13 Recommended