A 2 percent inflation target set by the Cabinet of Prime Minister Shinzo Abe has raised concerns about people's livelihoods as it is feared that the policy could cause consumer prices to increase while people's incomes remain the same.

Following the adoption of the policy, the value of the yen declined and share prices rose, raising hope that Japan will soon overcome its longstanding deflation. However, unless something is done to improve the employment situation and increase workers' wages, it is feared that the government's anti-inflation measures will be ineffective, only worsening debt-ridden state finances.

The financial strains of ordinary citizens are serious. Average wages have been decreasing since 1997, and the average bonus has plummeted to roughly 60 percent of its peak. In particular, the number of low-income earners, who make less than 2 million yen a year, has kept increasing, nearing some 11 million people across the country. Part-time and temporary workers, whose incomes are low and whose employment is insecure, account for over 35 percent of the total workforce, while households without any savings are also rapidly increasing. Still, they have managed to survive because consumer prices have kept falling.

The government claims that a rise in consumer prices will eventually lead to an increase in wages. However, one cannot help but wonder whether this will be true as workers' wages continued to fall even when companies' business performances were good. Those without savings who have managed to survive will be hit hard by rises in food prices and utility charges. To overcome the ongoing deflation, it is indispensable to expand consumer spending, which accounts for 60 percent of domestic demand. To that end, priority should be placed on increasing personal income by stabilizing the employment situation and increasing workers' salaries.

During the so-called spring labor offensive, the Japan Business Federation (Nippon Keidanren) said it will refuse to talk about an increase in base pay and even suggested that it will review the established annual wage hike depending on the length of service and ages of employees.

The Japanese Trade Union Confederation (Rengo) is set to demand that an income gap between workers of big businesses and those of small and medium-sized enterprises be narrowed and prioritize efforts to raise wages of employees of firms that have shown outstanding business performances, but appear to be on the defensive.

If workers' wages were further lowered following labor-management negotiations, it would offset the effects of anti-deflation measures to be implemented by the Abe Cabinet. There is room for discussion on how the government should be involved in labor-management talks, but it is necessary for the government and labor unions to hold close consultations on measures to increase workers' incomes.

If the government aims to increase consumer prices, it must place more emphasis than ever on specific policy measures to improve the employment situation and increase workers' wages. In particular, it is an urgent task to improve the salaries of employees of smaller businesses as well as temporary and part-time workers whose wages have kept decreasing. The minimum wage, which has a direct bearing on the incomes of non-regular workers, had been improved under the previous administration led by the Democratic Party of Japan, but still fell short of public livelihood assistance benefits in some regions. It is also important to expand the scope of part-timers covered by the employees' pension program and other social security systems.

Even if wages increase, consumers will only choose to save their money rather than spend it until they can live with no anxiety about their livelihoods.