Can Raising Japan’s Minimum Wage Accelerate Wage Growth?

By Luc Everaert and Giovanni Ganelli

Version in 日本語 (Japanese)

Japan’s minimum wage is 798 JPY ($6.52) per hour, lower than many other advanced countries, including the United States, and among the lowest relative to the average wage (see chart). For a country that needs consumers to boost spending to pull the economy out of 15 years of deflation and reinvigorate growth, a hike in wages across the board can go a long way. Continue reading “Can Raising Japan’s Minimum Wage Accelerate Wage Growth?” »

Japan: Time to Load a Fourth Arrow—Wage Increases

By Luc Everaert and Giovanni Ganelli

(Version in 日本語)

Everybody agrees: wages need to grow if Japan is to make a definite escape from deflation. Full- time wages have increased by a mere 0.3 percent since 1995! For example, despite its record profits, Toyota increased its base salary only by 1.1 percent last year. The average of 219 Keidanren firms managed just 0.44 percent. Clearly, an increase in base wages, colloquially referred to as “base up”, is long overdue.

Continue reading “Japan: Time to Load a Fourth Arrow—Wage Increases” »

By | March 13th, 2016|Financial markets, Fiscal policy, IMF, International Monetary Fund, Reform|

Infrastructure Investment: Part of Africa’s Solution

Antoinette SayehBy Antoinette M. Sayeh

Tremendous efforts are under way to upgrade sub-Saharan Africa’s infrastructure. But the needs on the ground are still immense as evidenced by the frequent electricity blackouts, poor roads, and insufficient access to clean water in many countries.

Infrastructure is one of the key challenges facing policymakers in the region—I experienced it first hand when I was finance minister of Liberia before coming to the IMF. The benefits are fairly clear: with improved infrastructure, new growth opportunities in the manufacturing and services sector can be generated, barriers to intraregional trade can be reduced, and economies will be better positioned to transition from low to higher productivity activities. Without improved infrastructure, I fear the increase in productivity and greater economic diversification necessary to sustain Africa’s current growth momentum will not materialize.

In this spirit, in the latest Regional Economic Outlook: Sub-Saharan Africa economists from the IMF’s African Department looked at progress so far in addressing the infrastructure deficit and discussed policies needed going forward.

Continue reading “Infrastructure Investment: Part of Africa’s Solution” »

Sins of Emission and Omission in Durban

As we slide into another year of tough economic times, it’s easy to understand why policymakers are preoccupied with the next few weeks. But they also need to be thinking about the longer term issue of leaving the planet in reasonable shape for future generations. Without serious efforts to reduce greenhouse gases, scientists predict that by the end of this century global temperatures could be 2.5 to 6.0 degrees (celsius) higher than a couple of hundred years ago. That could mean more heatwaves, more droughts, higher sea levels, more violent storms—and so on. When you start to think about the potential impact of, say, droughts on the livelihood of farmers, especially in poorer countries… well, you get the point. While some progress was made in the latest round of United Nations’ climate change negotiations in Durban, South Africa, we saw two major omissions. There was little progress on either carbon pricing or, related, financing for action against climate change. And there was not enough recognition of what economics has to offer to help tackle the problems.

Raising Government Revenue in Africa: A Road out of Poverty

Governments in Africa have a prime objective—to reduce poverty. To improve living standards and create jobs, they need to provide their citizens with better health care, better education, more infrastructure. They need to build hospitals, schools, and to pay doctors, nurses, teachers. All this costs money, and how to pay for this—in a way that is both fair and efficient—is a major challenge. With limits to how much a government can receive as grants or borrow, raising tax revenues will be a crucial element for governments to deliver more of these essential services and, in turn, reduce poverty. Policymakers will have an opportunity to exchange views on the challenges of Revenue Mobilization in Sub-Saharan Africa at a conference in Nairobi this week. To help frame that conversation, here are some ideas about priority areas for action.

By | March 21st, 2011|Africa, IMF, International Monetary Fund, Low-income countries|

Making up for Lost Time: Getting Back on Track to the Millennium Development Goals

With only five years to go until the deadline for the Millennium Development Goals, the global financial crisis struck a blow to the poverty reduction agenda. All is not lost, however. Reducing poverty on a massive scale is do-able—the number of people living in extreme poverty fell by a staggering 400 million from 1990 to 2005. The question is, how do we regain the momentum? It won’t be easy and, as a global problem, it will require a shared effort between the developing countries themselves, the advanced economies, and the international organizations.

By | September 20th, 2010|Africa, Economic Crisis, growth, IMF, International Monetary Fund, LICs, Low-income countries|
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