File photo: Former Prime Minister Shinzo Abe, who has been implicated in a lawsuit against an unreported political finance secretary, will hold a press conference in Tokyo on December 24, 2020.Reuters / Issei Kato
September 24, 2021
Tokyo (Reuters) – Rising wealth inequality in Japan has become a major issue in the ruling party’s leadership race to determine the next prime minister, and candidates are reassessing the legacy of the “Abenomics” policy of former Prime Minister Shinzo Abe. I had to do it.
In Abenomics, stock prices and corporate earnings soared, along with the expansion of fiscal and monetary policy pioneered by Prime Minister Abe in 2013, but households mostly benefited, according to a government survey published earlier this year. Not.
With Abenomics’ flaws in mind, top LDP leadership contenders Taro Kono, Minister of Vaccines and Fumio Kishida, have vowed to focus more on increasing household wealth.
“The important thing is to bring the benefits of economic growth to more people,” Kishida said Thursday. “We need to create a virtual cycle of growth and distribution. “
However, candidates lack details on how to proceed with Japan’s economic policy toolkit, which has been exhausted by years of massive monetary and fiscal stimulus.
Kono wants a rewarding business to raise wages by lowering corporate taxes, and Kishida wants to expand Japan’s middle class with targeted payments to low-income households.
The winner of the PLD presidential vote on September 29 is guaranteed to be the next prime minister of Japan by party majority. Two women, Sanae Takaichi (60), former Minister of State for Gender Equality, and Seiko Noda (61), former Minister of Gender Equality, are candidates for the four-man race.
Prime Minister Yoshihide Suga will succeed Prime Minister Abe and resign in less than a year, and a parliament will be held on October 4 to succeed him.
A government survey, conducted once every five years and released in February, is increasingly drawing attention to the trend of inequality during the Abe era.
Shigeto Nagai, head of the Japanese economic sector at Oxford Economics, said the study found that “Abenomics have had absolutely no success in increasing household wealth through rising asset prices.”
According to a five-year survey, the average household wealth fell by 3.5% between 2014 and 2019, with only the richest 10 having benefited from an increase.
The traditional risk aversion of Japanese households meant that the balance of financial assets fell 8.1% over the five years from 2014 and did not benefit from the recovery in the stock market.
“The new prime minister recognizes the myth that reflationary policy, which is based on aggressive monetary easing, cannot solve all of Japan’s problems without addressing its own structural problems, given the failure of the Abenomics. I think it’s necessary, ”Nagai said.
Bank of Japan Governor Haruhiko Kuroda defended the Abenomics, saying the pandemic was not due to slowing wage growth, but mainly sluggish consumption.
“Unlike the United States and Europe, Japanese companies have protected jobs during a pandemic,” Kuroda said, asking why the runoff to households is low.
“Wage growth is quite modest, but this is not the main reason for the weakness in consumption,” he said at a press conference on Wednesday. “As the pandemic subsides, consumption is likely to increase. “
(Report by Reika Kihara, edited by Simon Cameron Moore)