PM Kishida’s plans to lift wage growth largely follow the Abenomics blueprint of tax incentives, targeted pay hikes in sectors facing severe labour shortages and rapid minimum wage hikes. A tax on corporate cash holdings would be a novelty, but we suspect that firms would respond by diverting their cash into other financial assets or raising dividend payouts rather than by lifting wages. Unfortunately, Kishida is showing little appetite for putting his money where his mouth is by providing generous across-the-board pay hikes for public sector workers.
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