IMF Urges Japan to Realize 3 Pct Basic Pay Hikes by Profitable Firms

Tokyo, June 20 (Jiji Press)--The Japanese government should take necessary polices to push profitable companies to raise base wages by at least 3 pct, in order to achieve the "ambitious targets" set under Prime Minister Shinzo Abe's "Abenomics" reflationary policy, the International Monetary Fund said Monday. In a statement released at the end of a regular screening visit by IMF staff to Japan, the international lending agency urged Tokyo to implement "income policies in combination with reforms to tackle labor market duality," while reiterating the importance of fiscal and monetary policies for economic growth. Japan "can introduce a 'comply or explain' mechanism for profitable companies to ensure that they raise base wages by at least 3 pct ... and back this up by stronger tax incentives or--as a last resort--penalties," it said. The IMF showed understanding of the Abe government's decision to defer the planned consumption tax hike from 8 pct to 10 pct until October 2019. But at the same time it noted that the tax rate needs to be gradually raised to 15 pct to "strike the right balance between supporting growth and achieving fiscal sustainability in the long run." END