© Reuters. FILE PHOTO: Pedestrians wearing protective masks during the coronavirus disease (COVID-19) outbreak head out in Tokyo, Japan on February 2, 2021. REUTERS / Kim Kyung-Hoon / File Photo
By Leika Kihara
TOKYO (Reuters) – Japan needs to step up aid to small businesses trying to raise wages to support spending on tourism, restaurants and other services hit by the COVID-19 pandemic, private sector members of a key government body said on Wednesday.
A resurgence in infections prompted the government to impose a new state of emergency in the Olympic host city of Tokyo that will last during and beyond the Games, defeating policy makers’ hopes for a strong pickup in growth this quarter.
“The key to an economic recovery is to revive the service consumption lost by the pandemic,” a group of business executives and academics said in a proposal presented to the government’s top economic council.
Japan needs to ensure that boosting tourism, events and restaurants through vaccination later this year leads to a sustained recovery in consumption by next year, they said, calling for “flexible” policies.
The proposals of the private sector members tended to emphasize the priorities of the administration and served as the basis for the economic policy of the government.
Speaking at the council meeting on Wednesday, Prime Minister Yoshihide Suga said the government would extend special employment subsidies for companies affected by the pandemic until the end of the year.
The move would be part of the government’s efforts to encourage companies to raise wages, especially smaller companies that pay minimum wages to their employees.
Suga has made raising the Japanese minimum wage one of his political priorities to fight deflation and give households more purchasing power.
An influential government body last week recommended raising the national average minimum wage by about 3% to nearly $ 8.50 an hour in the current fiscal year.
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