Panel Calls for Investments and Wage Hikes to Strengthen Economy

Tokyo, June 26 (Jiji Press)–A Japanese government advisory panel on Friday called for a virtuous cycle of investments and wage hikes to achieve a strong economy. This call was included in the Fiscal System Council’s proposals submitted to Finance Minister Satsuki Katayama before the government compiles a new basic policy on economic and fiscal management and reform. The panel said that Japan’s economy has exited from deflation and is transitioning from a stage of demand shortfalls to one of supply constraints. Regarding the government’s intention to reform its budget compilation process, including reducing its reliance on supplementary budgets, the panel stressed that it is necessary to maintain fiscal discipline despite various fiscal needs. The panel also said that the government’s new target of steadily reducing the country’s ratio of public debt to gross domestic product, if properly planned out, would help enhance the predictability of multi-year fiscal management. Meanwhile, it warned that optimism about economic growth and interest rates and a lack of medium- to long-term perspectives could undermine market confidence in government finances. On social security reform, the panel called for alleviating the social security burden on working generations and also requested drawing up a roadmap to raise the out-of-pocket medical payment rate for people aged 70 or older to 30 pct, on par with that for working generations. Recognizing the possibility of labor shortages becoming even more serious, the panel highlighted the need for integrated efforts to improve labor productivity and to optimize personnel distribution, in order to transform the industrial structure into a more efficient and sustainable model. END [Copyright The Jiji Press, Ltd.]