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Saturday, April 7, 2007

Abe's plan appears to be election ploy


Staff writer

Prime Minister Shinzo Abe wants to narrow the disparity between the rich and poor with a new package of programs, but the plan is scarce on details and the people it will affect are already skeptical the ideas can be effective.

The plans, to be finalized by the end of June -- just in time for campaigning for the July Upper House election -- include private job-training programs and asking firms to hike wages.

Helping the "losers in society" as Abe has called them, has been one of the prime minister's main goals in his first year as leader. However, it took only two weeks and three meetings for a government panel on the issue to announce its general outline, on Feb. 15, and there will be only three meetings of government, business and labor to fill in the details.

The panel's blueprint contains no strategies to get companies to participate in the job-training program or to raise wages, and businesses already appear reluctant to participate.

One of the main points in the outline is that the government will give incentives to firms to run job-training programs for people who have had trouble finding full-time work. These people include part-time workers, university graduates, single mothers and people who want to re-enter the workforce. Those who complete the training would get certificates, which, according to the panel, would help them get jobs.

However, there are no details yet about the training or how it would help people land full-time work.

The panel has also proposed that small firms raise wages along with productivity, which it believes will give firms the extra profit to hike pay.

Chief Cabinet Secretary Yasuhisa Shiozaki told the government's Economic and Fiscal Policy Council on Feb. 16 that the aim of this proposal is to raise the standard of living of people on low wages and "maximizing chances for willing people" to get ahead.

Businesses are skeptical, saying that productivity comes first and increasing output does not necessarily lead to a rise in profits.

Hideo Kumano, chief economist at Dai-ichi Life Research Institute Inc., said the panel's proposal was not practical as it is hard for small companies to raise wages unless profits -- not just productivity -- increase substantially.

And since firms face fierce competition abroad yet have low interest rates at home, they put their profits into capital investment, not salaries, he said.

The business and labor reps in the group tasked with coming up with the details for the state's outline also don't grasp the productivity-higher pay link.

"Higher productivity must come first, and not higher wages," Akio Saeki, chairman of the National Federation of Small Business Associations, was quoted by economy minister Hiroko Ota as saying in a March 22 meeting of government, business and union officials.

Unions are also skeptical. Yukio Koide, chairman of the Japanese Association of Metal, Machinery and Manufacturing Workers, said unions doubt that higher productivity will automatically lead to firms paying higher wages.

To get firms to raise salaries, the government needs to offer a tax exemption for labor costs, Dai-ichi's Kumano said.

He said it looked like Abe, whose lack of economic expertise is no secret, had come up with a hasty plan to help his Liberal Democratic Party win the July election.

Kumano called it an "advertising balloon" for the election campaign to counter criticism from the opposition parties, which say the gap between the haves and have-nots widened under Abe's predecessor, Junichiro Koizumi. "They're trying to dodge the Democratic Party of Japan's attacks on the growing gap," he said.



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