Japanese government aims to boost economy with 1% increase in real wages

According to Bloomberg, Japan’s government is reportedly set to establish its first-ever official target for real wage growth at 1%. The initiative proposed by Prime Minister Shigeru Ishiba aims to boost the economy amid persistent inflation, which has been exceeding the Bank of Japan’s 2% target for three consecutive years.

The official says the government will provide support to small and medium-sized businesses, which account for 70% of the nation's workforce. While authorities have repeatedly called on businesses to raise wages, this would be their first official numerical target. The new wage growth goal coincides with existing plans to increase the minimum wage to 1,500 yen (about $10) over five years, Bloomberg reports.

Despite record nominal wage growth at major corporations, household purchasing power continues to shrink due to inflation. Analysts note this disparity is fueling public discontent and creating a tough challenge for policymakers ahead of summer elections.