Japanese business leaders have promised Prime Minister Shinzo Abe to do their "utmost" to raise wages and allow suppliers to pass on higher costs, while also urging him to push through labor reforms, said a draft agreement between the government, business and labor groups.
Abe and business leaders, including Sadayuki Sakakibara, chairman of Toray Industries and the Keidanren business lobby, are scheduled to announce the plan on Tuesday after a meeting in Tokyo, according to a draft seen by Reuters.
The agreement, the broad terms of which were first reported by the Yomiuri newspaper on Saturday, were hammered out in advance of the election landslide that returned Abe and his ruling coalition to power on Sunday.
Wage growth is crucial to the success of the "Abenomics" agenda aimed at breaking a cycle of slow growth and deflation through monetary and fiscal stimulus and pledges of structural reform.
For a second year, Abe is pressuring major companies to raise base pay in the fiscal year from April. Some major unions have signaled that they will ask for a wage hike of over 2 percent in base pay.