Tokyo, November 27

Prime Minister Shinzo Abe has ordered Cabinet ministers to prepare an extra spending package, including cash handouts for the poorest pensioners, seeking to breathe fresh life into Japan’s stalling recovery.

The amount of the supplementary budget has not been decided, the Chief Government Spokesman, Yoshihide Suga, said today after the Cabinet met.

Local media said the package will likely exceed three trillion yen

($24.5 billion) and will be prepared in December, for approval early in the new year.

It will likely include one-time subsidies of 30,000 yen ($245) for cash-strapped pensioners. Suga said it also will include provisions to help farmers improve their competitiveness as Japan opens its markets further as part of a Pacific Rim trade agreement, the Trans-Pacific Partnership.

Suga said the measures are part of broader plan announced by Abe to increase Japan’s gross domestic product to 600 trillion yen by 2020.

The extra spending aimed at farmers and seniors, bastions of support for Abe’s Liberal Democratic Party, also will likely find favour among voters ahead of an election next summer.

Japan slipped into a mild recession in the spring. Although the jobless rate fell to a 20-year low of 3.1 per cent in October, according to data released today, consumer spending and incomes also edged down as the tight labour market failed to spur significant increases in wages.

Abe has proposed a raft of policies meant to help workers cope with child and elder care, part of a ‘mobilisation to ensure active participation of all members of society’.

Ultimately, the fate of his ‘Abenomics’ approach, which has relied heavily on pumping cash into the economy, hinges on getting consumers and companies to spend more and thus boost demand.

So far, short-handed employers have resorted to use of overtime and hiring more temporary workers, seeking to avoid increases in base wages that would be difficult to reverse if the economy takes a turn for the worse.