Photo/Illutration Prime Minister Fumio Kishida gives his first news conference this year in Ise, Mie Prefecture, on Jan. 4. (Pool)

ISE, Mie Prefecture--Prime Minister Fumio Kishida stepped up his call for companies to raise salaries to a level higher than the rate of inflation, labeling the issue as one of two pivotal policy areas his administration will tackle this year as a top priority.

At his first news conference this year here, Kishida said Jan. 4 the other challenge facing his administration is how to stem the declining birthrate, which he said required an “other-dimensional” policy response.

These questions “cannot be pushed back any longer,” the prime minister added.

He described envisioned pay raises as a “core part” of his brand of “new capitalism” that produces a virtuous cycle of growth and redistribution.

“We must achieve it at all costs,” he said in calling for a system to be created where annual pay raises are built in.

It remains questionable, however, how much the government can do in this regard as pay raises are ultimately a matter left to the discretion of individual companies based on their financial standing.

Kishida did not lay out specific plans to make them happen.

Regarding measures to halt the declining birthrate, he promised to present a framework for doubling budgets for children by June, when the government crafts a policy to address the question.

He cited expanded child allowances as among key measures under government consideration.

But widening the volume of assistance and number of recipients will force the government to secure a stable source of funding exceeding 1 trillion yen ($75 billion) every year.

That would inevitably raise the question of how to pay for the measures. Public debate over a possible new social insurance premium or a tax hike would be unavoidable.

Turning to the Group of Seven summit Japan will host May 19-21 in Hiroshima, Kishida said the meeting will serve as an opportunity to demonstrate solidarity among nations.

“The international order has been shaken by Russia’s outrageous act of invading Ukraine,” he said. “At the summit, G-7 nations should show solidarity not just among themselves, but also with the rest of the world.”

Kishida, who represents a constituency in Hiroshima, said he is ready to send a powerful message to the international community that they should work to build a world without nuclear arms.

He skirted making any commitment on a possible dissolution of the Lower House for a snap election, saying it was a decision that lay exclusively within the purview of the prime minister.

The current term for members of the Lower House will be up in October 2025.

Speculation about an election being held earlier than the deadline grew when Kishida indicated during a TV appearance late last year that he is considering calling one prior to the start of a planned tax hike to shoulder significantly increased defense spending.

The government plans to spend a total of 43 trillion yen on defense over five years from fiscal 2023.

It plans to raise corporate and income taxes, as well as the tax on cigarettes, at an “appropriate time in 2024 or afterward” to help pay for the increase in defense spending.

Kishida said a Lower House election before the October 2025 deadline is a possibility since the government’s plan to raise taxes starts in 2024 at the earliest.

As for unified local elections to be held in spring, he expressed hopes the ruling Liberal Democratic Party will prevail.

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