By Max Sato
(MaceNews) – Japanese Prime Minister Fumio Kishida on Wednesday announced that he will not seek re-election at the Liberal Democratic Party leadership convention in late September, taking the blame for widespread political funding scandals at the ruling party, a key factor behind sluggish voter support for the administration.
Kishida, 67, will step down at the end of his three-year term next month as the approval ratings of his cabinet have drifted lower amid elevated costs for daily necessities and voter frustration over the money scandals involving many LDP factions at a time when the government plans to raise taxes to finance higher military spending. He sought to ease the burden of high costs by providing subsidies to electricity and natural gas suppliers and giving income tax rebates but his approval ratings remain low.
“To show that the LDP is changing, the most obvious first step is for me to step down,” Kishida told a news conference. “I will not run for the upcoming election of the party president.”
In the latest scandal, LDP lawmakers received cash from their factions that was raised through fund-raisers, but the money was not reported as income.
The official announcement followed recent chatter among LDP lawmakers that they could not win the next lower house election under Kishida but there is also concern that the party does not have a strong leader.
Shigeru Ishiba, a former defense minister, told reporters on Wednesday that he would run for the party leadership election if he could get support from 20 fellow LDP politicians, the minimum requirement. Ishiba, 67, challenged the incumbent Shinzo Abe in September 2018 but Abe won his third term, and also lost to Yoshihide Suga in 2020.
Large Japanese companies are raising wages at the highest pace in 33 years to cope with labor shortages in a fast-aging society. Japan is allowing more foreign workers but it has a tight immigration policy in sharp contrast to other major economies like Canada where a surge in the number of newcomers helped supply labor during the pandemic and also supported consumption.
Policymakers are monitoring whether the wage hikes are spreading to small businesses, which employ about 70% of the workforce.
There were expectations that Kishida will dissolve the House of Representatives and call a snap election sometime this year to avoid being forced to do so closer to the end of the current four-year terms for lower house members in October 2025. All but one of the 26 general elections held under the current post-war Constitution have been called before the end of the terms, often after halfway through.
Earlier, Kishida appeared to be running for another term as the party president, and thus the prime minister because of the ruling coalition’s majority in parliament, in order to pursue his goal of bringing in a “new capitalism” and redistribute wealth.
Kishida has criticized “neoliberalism” that has lasted since the administration of Junichiro Koizumi, an LDP prime minister from 2001 to 2006, who opened up the labor market to staffing agencies without providing social security networks for a growing number of underpaid contract workers, many of them women and young people.
For the most part, Kishida inherited the policy tool boxes prepared by Yoshihide Suga, who stepped down amid falling voter support about a year after taking office, and Shinzo Abe, who led the LDP back to power in late 2012 by pledging to “revitalize” the Japanese economy with aggressive monetary easing, flexible fiscal spending and growth strategies.
Massive cash injections into the financial system by the Bank of Japan, which was launched in April 2013, initially lifted inflation toward the bank’s 2% inflation but the long-lasting drag from the sales tax hike to 8% from 5% in April 2014 and the dampening impact of a crude oil price plunge in 2015 depressed prices again.
The global supply chain breakdown during the pandemic triggered a spike in inflation in many parts of the world and was aggravated by Russia’s invasion of Ukraine in February 2022.
Japan’s core consumer prices (excluding fresh food) rose 2.3% in 2022, a jump from 0.2% drop in reach of the previous two years. The core CPI annual rate then surged to 3.1% in 2023, the highest in 41 years, but wage hikes didn’t catch up with inflation, leading real wages to fall 2.5% in 2023.
More recently, nominal wages jumped on the year in June while real wages marked their first gain in more than two years, data released earlier this month by the Ministry of Health, Labour and Welfare showed, partly supporting the move by the Bank of Japan to raise the target for the overnight interest rate to 0.25% from a range of zero to 0.1% at the end of July as part of its process to normalize monetary policy.
Total monthly average cash earnings per regular employee in Japan posted their 30th straight year-on-year rise, up 4.5% in June, accelerating further from increases of 2.0% in May and 1.6% in April. The increase was led by higher base wage growth and a rise in special pay. Base wages rose 2.3% on year in June, marking the 32nd straight gain and the highest growth in nearly three decades, after rising 2.1% in May and 1.8% in April.
In real terms, average wages rose 1.1% on year, marking the first rise in 27 months, after falling 1.3% the previous month.
Since taking office in October 2021, Kishida has shuffled his cabinet in a bid to turn around sliding voter support. His administration has also been rocked by revelations that ruling party lawmakers have done little to counter what some lawyers say are illegal activities by the Unification Church, which has cultivated close ties with conservative politicians for over five decades.
The cult, which was founded in Seoul in 1954 by the late Sun Myung Moon, has been accused for decades in Japan of brainwashing followers into donating large amounts of cash, buying expensive religious goods and marrying a stranger at mass weddings, according to news reports and testimony in courts.
Abe was killed during a campaign speech on July 8, 2022, by a gunman who said he believed Abe was promoting the beliefs of the Unification Church. The suspect was reported to have said his mother had donated large amounts of money to the church, bankrupting the family.
Abe’s grandfather Nobusuke Kishi was prime minister from 1957 to 1960 and is known to have cultivated ties with the Unification Church and the International Federation for Victory over Communism, the latter group also formed by South Korea’s Moon in 1968. Kishi had been imprisoned as a suspected Class A war criminal but was later released by U.S. occupation authorities in the interests of the US government fight against communism.
The Unification Church penetrated the Japanese political system by sending volunteers to work mainly for LDP election campaigns. Many politicians were complacent about accepting donations from the church and gave speeches at church events billed as promoting “world peace.”
The church changed its name to the Family Federation for World Peace and Unification in 1994 in a move criticized by lawyers and former followers as an attempt to whitewash its image.
In Japan, the church’s application for changing its registered name was rejected by the government in 1997 but was swiftly approved in 2015 under the Abe administration, allegedly under the influence of then education minister Hakubun Shimomura, according to Japanese news reports.