Ja­pan plans ex­tra bud­get, hand­outs to push re­cov­ery

Abe seeks to breathe fresh life into econ­omy

Kuwait Times - - BUSINESS -

TOKYO: Prime Min­is­ter Shinzo Abe has or­dered Cab­i­net min­is­ters to pre­pare an ex­tra spend­ing pack­age, in­clud­ing cash hand­outs for the poor­est pen­sion­ers, seek­ing to breathe fresh life into Ja­pan’s stalling re­cov­ery.

The amount of the sup­ple­men­tary bud­get has not been de­cided, the chief gov­ern­ment spokesman, Yoshi­hide Suga, said Fri­day af­ter the Cab­i­net met.

Lo­cal me­dia said the pack­age will likely ex­ceed 3 tril­lion yen ($24.5 bil­lion) and will be pre­pared in De­cem­ber, for ap­proval early in the new year.

It will likely in­clude one-time sub­si­dies of 30,000 yen ($245) for cash­strapped pen­sion­ers. Suga said it also will in­clude pro­vi­sions to help farm­ers im­prove their com­pet­i­tive­ness as the Ja­pan opens its mar­kets fur­ther as part of a Pa­cific Rim trade agree­ment, the Trans-Pa­cific Part­ner­ship.

Suga said the mea­sures are part of broader plan an­nounced by Abe to in­crease Ja­pan’s gross do­mes­tic prod­uct to 600 tril­lion yen ($4.9 tril­lion) by 2020.

The ex­tra spend­ing aimed at farm­ers and se­niors, bas­tions of sup­port for Abe’s Lib­eral Demo­cratic Party, also will likely find fa­vor among vot­ers ahead of an elec­tion next sum­mer Ja­pan slipped into a mild re­ces­sion in the spring. Al­though the job­less rate fell to a 20year low of 3.1 per­cent in Oc­to­ber, ac­cord­ing to data re­leased yes­ter­day, con­sumer spend­ing and in­comes also edged down as the tight la­bor mar­ket failed to spur sig­nif­i­cant in­creases in wages.

Abe has pro­posed a raft of poli­cies meant to help work­ers cope with child and el­der care, part of a “mo­bi­liza­tion to en­sure ac­tive par­tic­i­pa­tion of all mem­bers of so­ci­ety.”

Ul­ti­mately, the fate of his “Abe­nomics” ap­proach, which has re­lied heav­ily on pump­ing cash into the econ­omy, hinges on get­ting con­sumers and com­pa­nies to spend more and thus boost de­mand.

So far, short-handed em­ploy­ers have re­sorted to use of over­time and hir­ing more tem­po­rary work­ers, seek­ing to avoid in­creases in base wages that would be dif­fi­cult to re­verse if the econ­omy takes a turn for the worse. House­hold spend­ing fell 2.4 per­cent in Oc­to­ber from the year be­fore, and av­er­age in­comes fell 0.9 per­cent, Fri­day’s data showed.

Ja­pan’s in­fla­tion rate also was lower in Oc­to­ber, with core in­fla­tion ex­clud­ing volatile food prices down 0.1 per­cent for the third month in a row.

Abe has called for rais­ing Ja­pan’s min­i­mum wage, which is now at a mod­est 798 yen ($6.50) an hour on av­er­age, by 3 per­cent a year, aim­ing to get it up to 1,000 yen ($8.15) an hour by 2020.

Big com­pa­nies, reap­ing record prof­its thanks to strong ex­port earn­ings, can af­ford that. How­ever, most peo­ple paid the min­i­mum wage work for small and medium-size com­pa­nies that can­not af­ford to pay more, said econ­o­mist Masamichi Adachi of JPMor­gan. “Those small tiny firms, which are al­ways los­ing money and don’t pay taxes, are not making money at all. If they have to raise wages their losses will grow and they will find it hard to sur­vive,” he said. — AP

TOKYO: Toshiba Pres­i­dent Masashi Muro­machi (C) is sur­rounded by re­porters as he leaves fol­low­ing a press brief­ing at the com­pany’s head­quar­ters in Tokyo yes­ter­day. Toshiba last week re­ported that its US nu­clear sub­sidiary West­ing­house had booked an im­pair­ment loss. —AFP

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