Gov't to cooperate with business, labor circles toward wage hikes in Japan

The government agreed with leaders of business organizations and labor unions Friday to cooperate in seeking to raise worker salaries in Japan, a key goal under Prime Minister Shinzo Abe's "Abenomics" economic policy mix.

"We will lead expansion in business earnings to wage increases," they said in an agreement signed at a joint meeting. Abe welcomed the "shared awareness," and urged the groups to "boldly put (the agreement) into action."

As part of efforts to end nearly two decades of deflation in Japan, Abe has asked companies to raise worker salaries in exchange for government stimulus measures, including tax breaks and deregulation to encourage business investment.

Wage hikes are a key issue for the Abe administration, which wants to ease any negative impact on the economy from next April's sales tax hike. The increase from 5 to 8 percent is feared to depress both household spending and corporate capital spending.