with the impact of covid - 19 waning. therefore, wages of non - regular employees, which account for a large share of those working in the services industry, are expected to rise. this could gradually spill over to wages of regular employees, such as at small and medium - sized firms. moreover, tightening labor market conditions may lead to wage increases through, for example, reallocation of labor to areas with higher productivity. from a somewhat long - term perspective, even though the working - age population in japan has been declining, the total number of employees has grown by more than 4 million over the nearly ten years since 2013, mainly due to an increase in the labor force participation of women and seniors. the labor force participation rate of women in japan has become higher than in the united states. the flip side is that room for additional labor supply is gradually shrinking in japan. in this situation, it is likely that momentum for wage increases will also come from the labor supply side in the future. in addition to such labor market conditions, the rises in prices to date will likely be reflected to a considerable extent in the outcomes of the next annual spring labor - management wage negotiations. it is necessary to examine future wage developments carefully since they are also affected by economic developments at home and abroad. iii. the bank's conduct of monetary policy now, i would like to talk about the bank's conduct of monetary policy, based on the economic and price developments i have described. at its monetary policy meeting last month, the bank decided to continue with monetary easing. since april this year, the year - on - year rate of change in the cpi has been above 2 percent, and it registered around 3 percent in the latest reading. how monetary policy is conducted to address inflation should differ depending on the extent of inflation and on what underlies it. in this regard, in the united states, for instance, the economy reopened at a relatively early stage after the onset of the pandemic, and consumption activities have remained robust. at the same time, labor supply has been slow to recover, especially among seniors. as labor market conditions have tightened due to substantial excess demand, not only the inflation rate but also the wage growth rate has risen significantly. under these circumstances, increases in services prices, which tend to reflect wage growth, have pushed up overall inflation ( chart 12 ). the inflation rate has remained at a level significantly above the 2 percent target of the federal reserve in a situation where wages

and the total number of employees is growing at around 1 percent a year despite the diminishing working - age population. considering the labor market over the longer term, however, there is evidently a need to start exploring other possible measures to deal with the declining population. for that point, i am informed that the uk has accepted around 6 hundred thousand immigrants in the last three years and they are contributing to the growth of the uk economy. japan too needs to consider accepting more foreign workers, while paying due attention to its impact on japanese society as a whole. the second issue is fiscal consolidation. basically, i believe that it should be carried out in as transparent a fashion as possible. the long - term path of fiscal consolidation and its measures should be spelt out clearly in advance. as for the pace of consolidation, it is important that it should be measured, with each step taken in confidence that the economy remains on a sustainable growth path. that is how fiscal consolidation has proceeded to date. the japanese government, while establishing a precise target for how much they intend to reduce fiscal expenditure, aims to achieve a surplus on its primary balance by the early 2010s. the primary balance deficit, which expanded to around 6 percent of gdp in fiscal 2003, is expected to fall to around 0. 9 percent this fiscal year. spending on public works for this fiscal year, in particular, has declined to around half its peak in fiscal 1995. the amount of the reduction is large, corresponding to around 4 percent of gdp. yet even with such steady progress in fiscal consolidation, the public debt, at over 140 percent of gdp, is still the largest among leading economies. the government's next step is to secure a stable reduction of this rate by the mid - 2010s. it will be a considerable challenge when social security expenditure is increasing due to the aging population. and additional measures to reduce expenditure and maintain revenue levels, including possible changes in the consumption tax, should be examined, following nationwide discussions. the third issue is the intensification of competition with newly industrialized economies. particularly during the period after the collapse of the bubble economy when japan was undergoing heavy economic adjustments, the growing presence of newly industrialized countries tended to be regarded as a threat to japan's competitiveness. in recent years, however, japanese firms have become better adapted to the situation and a new international division of the production process, concentrated in asia, has been established. that is evidenced by the changing composition of japan's imports from asian