Ishiba Cabinet Adopts Basic Policy Prioritizing Wage Hikes Over Tax Cuts; National Average Minimum Wage to Increase to ¥1,500 Later this Decade

The Yomiuri Shimbun

16:21 JST, June 14, 2025

The Cabinet approved the Basic Policy on Economic and Fiscal Management and Reform on Friday.

The basic policy states the government will “pursue a policy of increasing wages over cutting taxes,” aiming to realize a growth-oriented economy through a real wage increase of about 1% per year.

This marks the first time Prime Minister Shigeru Ishiba’s Cabinet has adopted a basic policy, which outlines the future direction of the government’s key policies.

“We’ll aim to expand the overall economic pie and realize a growth-oriented economy in which people’s wages and incomes continuously increase,” Ishiba said at a meeting of the Council on Economic and Fiscal Policy on Friday.

As the House of Councillors election is set to be held this summer, calls for reducing consumption tax have been growing, mostly by opposition parties.

In a move to apparently hold such calls in check, the Ishiba administration has emphasized its stance of placing importance on wage increases.

In the draft version presented on June 6, the government’s wording on wage increases and tax cuts was more direct. However, the wording is believed to have been toned down in consideration to ruling party lawmakers who called for tax cuts.

In order to maintain growth amid a declining population, the government has decided it is necessary to realize a real wage increase of about 1% per year under stable price increases, thereby increasing private consumption and investment.

The government also stated a policy of raising the national average minimum wage to ¥1,500 later this decade.

Regarding rice prices, the government stressed its commitment to “facilitating the distribution of rice, including government-stockpiled rice.” It also said it would work on developing a comprehensive approach that not only includes consumers but also producers and distributors.

The basic policy also referred to reviewing a rice production policy, which effectively amounts to the reduction of rice paddy acreage.

On achieving a surplus in the combined primary balance of the central and local governments, the target date has been moved back from fiscal 2025 to fiscal 2025-26.

Regarding Japan’s nominal gross domestic product, the government has set a target of about ¥1 quadrillion by around 2040. Ishiba said the target will be pursued while simultaneously trying to achieve the primary balance target.

In addition to the basic policy, the Cabinet also approved Friday a revised version of its Action Plan for a New Form of Capitalism growth strategy, as well as its Regional Revitalization 2.0 basic initiative.