The Japanese government claims that cooperation with business and labor circles is essential. Commerzbank economists analyze the implications of the upcoming negotiations on salary increases.
A Japanese version of the German social contracts of the 1960s and 1970s?
“This time it has been reported that the government planned to bring together representatives of employers and unions to agree on salary increases. Any German reader with a good memory (and old enough) might recall a similar agreement in Germany in the 1960s and 1970s (‘konzertierte Aktion’ or social contract).”
“The Germans do not have fond memories of such an arrangement. It ended in bitter disagreement. In Japan it might work better. And even if one were skeptical, such a government initiative would be informative for yen investors. It would show that, after all, the government is interested in creating sustainable reflation. In that context, the appointment of a hardline BoJ president would be illogical“.
“Before you run off to sell JPY, let me warn you: government behavior is not always as consistent as has been assumed up to now. If the government urges both sides of the industry to raise wages, it could be an attempt to win over voters rather than a coherent macroeconomic plan..”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
