By Kentaro Kuroki / Yomiuri Shimbun Staff Writer

The Japanese government aims to realize a steady increase in real wages of about 1% a year, according to a draft of its growth strategy "Action Plan for a New Form of Capitalism," the details of which were learned Thursday.

The government plans to achieve the goal by ensuring that national and local governments raise the amount they pay for orders with companies and other organizations in line with overall rises in commodity prices, as well as by raising official prices for medical and nursing care services paid for by the public health care system, the draft says.

The draft also states that the government will aim to increase domestic investment by the public and private sectors to 200 trillion yen by fiscal 2040 and support private companies' efforts to enhance their "earning power."

The first edition of the action plan was created in 2022, and this will be the first revision of the plan under the Cabinet of Prime Minister Shigeru Ishiba. The cabinet will approve the draft in mid-June.

Given the recent surge in prices, the draft stresses that the central government will play a leading role in raising wages and passing on cost increases through higher prices. The government will thoroughly promote measures to increase prices paid for public works projects and outsourced business, both of which have a significant impact on regional economies, in order to reflect increases in costs.

In areas such as medical and nursing care, where prices are set by the government, the draft notes the need to make a detailed plan for shifting away from a cost-cutting model. It also sets an aim of reviewing medical and nursing care fees.

Through these and other measures, the government hopes to achieve a steady annual increase of about 1% in real wages over the five years through fiscal 2029. Real wages are calculated by adjusting nominal wages for the impact of inflation. 

The draft also sets out a plan to shift the Japanese economy toward a growth-oriented model driven by wage increases and expansion of investment. In fiscal 2023, private-sector capital investment totaled about 102 trillion yen. The government aims to use investment by both the public and private sectors to raise domestic investment to 135 trillion yen by fiscal 2030 and to 200 trillion yen by fiscal 2040.

The draft emphasizes the growth of small and medium-sized companies and designates areas such as health care, disaster prevention and preparation, and agriculture, forestry and fisheries as priority areas, for which the government will provide support for research and development and efforts to expand exports.

The investment policy of the Government Pension Investment Fund, which manages public pension funds, will be reviewed to promote "alternative investments" such as companies investing in domestic startups, as opposed to traditional financial assets like stocks.

With regard to the minimum wage, the draft states that the government will "continue to work tirelessly" to achieve its goal of raising the national average to 1,500 yen per hour during the 2020s.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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June 06, 2025 11:17 ET (15:17 GMT)

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