Japan's gross domestic product for the April-June quarter of 2015 dropped 1.6% on an annualized basis, according to the first preliminary GDP estimate, showing weakness in areas such as consumption and exports. However, areas including corporate performance and employment are on a trend of improvement. Although the pace of economic recovery has been slowing, we envision that the Japanese economy will basically recover moderately. Concerning risks to hold back the economy, it is necessary to consider comprehensive measures without sealing up the mobilization of fiscal spending, under the premise of taking steps toward restoring fiscal health. The public and private sectors will also properly discuss with each other what kind of economic measures are necessary.
Regarding the Chinese economy, the pace of growth is seen to have decelerated, but we do not think there have been changes in its fundamentals. We also view the sharp declines in stock prices in the Shanghai market as being in a phase of adjustment following steep rises since the beginning of this year. People are reacting excessively to the China risk. While there are concerns about its future, we consider the Chinese economy as fundamentally moving within the new normal.
Reduced consumption tax rates
Keidanren has long expressed opposition toward introducing reduced consumption tax rates, asserting that a simple benefit measure is desirable as a policy for low-income earners. The framework being reported in the media recently is worth considering as an alternative to reduced tax rates.
Recruitment and employment of new college graduates
In the first place, the schedule for recruiting and employing new college graduates introduced in the current fiscal year was based on a strong request by the government. As this is the first fiscal year under this schedule, we see some confusion on the part of universities, students and companies, and problems including that the preparation period from the publicity activities to the selection process is too long have been pointed out. We think this is a very significant issue as there is even a survey showing that nearly 70% of students have already obtained early unofficial employment offers as of August. Meanwhile, we also hear that studying-abroad-students and students majoring in sciences appreciate this schedule.
Keidanren will conduct a survey among its member companies targeting October 1 to examine the actual situation. Based on its finding, we will improve problem areas that need to be fixed, if necessary, although it would probably be difficult to make drastic changes for next fiscal year.
The bill to revise the worker dispatch act is aimed at substantially improving the current system overall, including (1) strengthening the soundness of worker dispatch businesses, (2) improving the careers of dispatched workers and (3) changing the complicated time restrictions to an easy-to-understand framework. Its content is desirable for dispatched workers, dispatching agencies, and companies to which such workers are supplied. Along with the development of a system to improve their careers, we think it will also lead to a resolution of the problem in which workers are stuck in nonregular employment.
Concerning the bill to revise the labor standards act, attention is often paid to the aspect of "zero overtime pay." However, we think introducing a system in which workers are evaluated not for the time they spend but rather for the results they produce would make it possible for diverse and flexible ways of working. It calls for systems that are beneficial to employees who are working while raising children, so we want to look carefully at the positive aspects. It appears difficult for the bill to clear the Diet in its current session, but we surely hope it will be approved at the next session.
LDP presidential election
Since the inauguration of the second Abe administration in December 2012, the economic situation has changed significantly. The excessive appreciation of the yen has been corrected, and stock prices have more than doubled. Starting with such accomplishments of Abenomics, the Abe administration has produced great achievements overall in domestic politics and foreign affairs. It is important for policies to be implemented with continuity under a stable political environment, so we hope the Abe administration will continue for a long time.
According to opinion polls, people's opposition against the security bills is strong. We hope the government and the ruling coalition will do their best to explain the matter carefully until the very end. It is a necessary legislation considering the current international situation and security environment surrounding Japan, and we hope it will be approved in the current Diet session.
Toshiba's accounting scandal
It is extremely disappointing that Toshiba Corp.'s earnings report announcement and submission of its securities report were delayed again. We hope the company will fully explain to the market about the content of its 2014 fiscal year financial results released today, thoroughly work on preventing a repeat of accounting malpractice and regain its best form as a shining Toshiba.