Japanese Prime Minister Fumio Kishida last week called on business lobbies and unions to work together to "boldly reverse" a downtrend in workers' wages as the government seeks to achieve what it has called an era of "new capitalism”, reports Reuters. Japanese firms, long worried about losing customers and market share as the country grappled with deflation, have been wary about raising wages over the years. Instead, many have resorted to belt-tightening to cut costs, leaving employees with flat pay for decades. Kishida said raising wages was "extremely important" as a strong recovery from the Covid-19 pandemic would require wealth distribution to the middle class. Now is the time to shift the phase away from the contractionary cycle caused by deflation towards a virtuous cycle of growth and wealth distribution," Kishida said. A hefty wage hike is seen as a tall order in the country given that top Japanese firms and their labour unions have agreed on annual wage hikes of around 2% in recent years.