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Japan – Prime Minister vows to deliver higher wages

16 October 2013

Prime Minister Shinzo Abe pledged to create a virtuous circle of higher employment and spending and boost Japan’s role in global security, while giving few details on measures to spur investment and competitiveness, reports businessweek.com.

Mr Abe’s speech at the opening of the Japanese parliament marks the start of what he has dubbed the “session for getting things done,” after his ruling coalition won the upper house election in July, his victory removes the threat of a hung parliament.

Mr Abe said he aimed to boost employment and raise wages, creating a “virtuous circle” that spurs consumption and investment, according to a copy of his speech distributed to reporters in advance. He intends to deepen links between politics, labour and capital in a bid to realize this goal.

Speaking to lawmakers in Tokyo, Mr Abe said the effects of the first two of his “three arrows” of economic policy -- monetary easing and fiscal stimulus -- had yet to reach some parts of the country. “The escape from deflation is only part-way along,” he said. “We must continue along this path.”

Japan’s economy grew an annualised 3.8% in the second quarter and Mr Abe’s bid to end two decades of stagnation and deflation have led the Topix index to gain 40% this year, making Japan the world’s best-performing major stock market. To sustain the recovery, economists have recommended that Mr Abe seek to boost competitiveness by cutting corporate taxes, revamping rigid labour markets, and restraining social spending.

“There have been many similar growth strategies in the past,” Abe told lawmakers. “The difference is whether it is carried through or not.”

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