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Analysis: Abe shifts policy focus to distribution amid cloudy economic prospects

  • 2016-01-25 15:00:00
  • , Mainichi
  • Translation

(Mainichi: January 23, 2016 – p. 3)

 

 By Ryosuke Abe

 

 Prime Minister Shinzo Abe shifted his policy focus from growth to distribution in his policy address to the ongoing ordinary Diet session on Jan. 22. Amid growing doubts about the distribution of his economic stimulus measures, he is stepping up assistance to low-income households in a move to get an upper hand in the House of Councillors election scheduled this summer.

 

 He mapped out his “growth and distribution” stance in an urgent economic package unveiled in November, which called for “creating a society where all citizens are dynamically engaged.” In the latest speech, he set out various economic assistance plans aimed at improving people’s livelihoods.

 

 Behind these proposals are the fading effects of Abenomics. It remains unseen when an inflation target of 2% can be achieved. Since the beginning of the year, stock prices have been falling. Also, the bribery scandal involving Akira Amari, minister in charge of economic and fiscal policy, is negatively effecting political management. This will surely develop into a stumbling block in Diet deliberations on the budget draft for fiscal 2016. Since the Abe cabinet has been propped up by the bullish stock market, concerns are mounting within the Liberal Democratic Party that a continued slide in stock prices will affect the Upper House election.

 

 Meanwhile, the Democratic Party of Japan and other opposition parties are set to grill the government on the widening income gap and its business-centric economic policies. A LDP politician close to Abe noted that his policy shift to “distribution” ahead of the Upper House race is aimed at eliminating policy differences with the opposition parties.

 

 In his policy speech, Abe prioritized redressing wage gaps between regular and non-regular workers, saying, “We will make utmost efforts to realize equal pay for equal work.” Incomes of non-regular workers are about 70% of those paid regular workers. The government acknowledges the significant wage differences. A source close to him says: “He used the term ‘realize’ to show his strong resolve to address this issue.”

 

 But it is not easy to realize the “equal pay for equal work” initiative, as this is not compatible with Japan’s lifetime employment practice. Many Japanese firms adopt “balanced remuneration,” which factors in responsibilities of workers, the length of their employment, and job requirements. The full-fledged implementation of “equal remuneration” will surely force a change in the existing work practice. This may cause companies that are not making a profit to cut wages for regular workers.

 

 In September, the “equal pay for equal work” legislation sponsored by opposition parties was enacted. But it was watered down, as it included the term “balanced remuneration” at the request of the ruling parties, which are closer to business management.

 

 In his policy speech, Abe avoided touching on “equal remuneration” but mentioned he will work to ensure non-regular workers will be paid on the basis of balanced remuneration. “A system of equal pay for equal work is an extension of equal remuneration,” said DPJ leader Katsuya Okada at a press conference. “I was surprised that Abe used the term balanced remuneration in the same paragraph,” he added, indicating his intention to ask Abe how serious he is about implementing this initiative. (Abridged)

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