Recruitment and employment of new college graduates
From this year, the start of the period of recruiting and employing new college graduates has been moved back, but because this move caused the period for companies' publicity activities to be extended by a month and because non-Keidanren-member companies used the schedule as in the past for their recruitment activities, various problems occurred as the process was prolonged for both students and companies. Looking at the results of the survey conducted on Keidanren member companies, nearly 90% responded that it had a negative impact on their recruitment and employment activities and some 80% sought a review of the starting period. The survey has also brought to light the impact on students, and more than 90% responded that there was a certain negative impact.
The change in schedule was initially intended to allow students more time to concentrate on their studies, but the prolonged job search period has posed the biggest problem for their studies. If we continue the current schedule next year, the same problems that occurred this year could happen again. It is necessary to come up with some kind of improvements also for the sake of current juniors.
For next year, preparations are already under way to start activities in line with the current schedule, including the start of companies' briefing sessions in March. Also, there are views on the universities' side that juniors were able to concentrate on their studies because the start of companies' publicity activities was delayed to March. And so we think it is appropriate to keep the starting date of publicity activities at March 1.
On the other hand, it is very important also for students that the start of employment screening be decided at an early time, so we will coordinate fully with the government and university officials to make a formal decision by the end of November. Keidanren thinks there is a need to move up the August start of employment screening by about two months. The reasoning behind this is to respect the spirit in which the schedule was moved back to secure learning opportunities for students, while trying to correct the situation in which their job search period has become prolonged. As for the screening involving new hires for 2018 on, Keidanren's Committee on Employment Policy will continue discussions based on the actual situation and exchange opinions with relevant parties so that we can decide on a new policy as soon as possible.
The schedule for this year was moved back in response to a request from the government, while there were also some within Keidanren who pointed to envisioned problems at that time. In November 2013, the government and four related entities (the Ministry of Education, Culture, Sports, Science and Technology, the Ministry of Economy, Trade and Industry, the Ministry of Health, Labor and Welfare and the Cabinet Office) made a request with a formal letter to about 450 business groups including Keidanren, asking them to comply with the schedule. We implemented the recruitment and employment activities under the new schedule starting this year, after a one-year notice period. This was not necessarily a schedule change that Keidanren desired and there were concerns, but we created a new guideline and called on member companies to follow it. Meanwhile, there were groups that did not call on members to comply with the government's request and those that said they will not follow the request. The new schedule got off to a start in this situation, but after implementing it this year, various problems came to light. Under the major premise of fully securing study time for students, we will first make the minimum possible improvements within the current framework and make it better.
This time we came up with the idea of moving up the schedule by about two months because if the companies' publicity activities begin in March, at least three months will be needed for such activities. For students, this is a matter that will affect their whole lives so we think they would want to visit as many companies as possible and check with their own eyes the various possibilities out there. We cannot shorten the publicity activities too much. But if we make it too long, that would lead to the problem we have this time of a long period of activities in the hot season. With these factors in mind, we determined that about two months would be a common ground. If it is moved up to May, then there will be only two months from the time publicity activities start in March, so we thought it would be difficult to start screening activities from May if the publicity activities were to start in March.
Some say it is problematic that the schedule changes every year, but there have been so many difficulties pointed out in this year's schedule that it would be a problem if we were to continue it for another year having known about all this. For someone in a position of responsibility, it is impossible not to do anything knowing that many problems exist. Some point out that there is inconsistency in our policy, but from the standpoint of fulfilling responsibility I think it is more problematic if we do not do anything. We must make some kind of improvement if possible, so we will discuss the matter with relevant parties, get their understanding, and make a decision by the end of November.
In the previous public-private dialogue, Prime Minister Shinzo Abe asked the business community to indicate its basic thoughts on capital investment and wage increases. The point of Prime Minister Abe's remarks is that the most important aspect of realizing a strong economy (GDP of 600 trillion yen by 2020) as part of the new set of three arrows of Abenomics is to continue a positive economic cycle. To this end, policy responses are also necessary, but as expansion in consumption will serve as a big engine, and continuous wage increases are necessary for this. Also, to invigorate the economy, it is necessary to expand capital investment. We completely share this recognition, so it is a matter of how the business community responds to this request.
In the past two years, the business community has taken steps toward raising wages based on its own decisions. A positive economic cycle is necessary for the Japanese economy, and for that the business community led the way in increasing wages, including raising base pay. We were thus able to realize increases in wages and bonuses. This is the result of companies' voluntary decisions. This time as well, we think companies will take steps toward raising wages depending on their performances, based on their own decisions. As for capital investment also, we will not be taking action just because the government told us but rather to expand it as much as possible in the context that companies proceed with aggressive management. Keidanren will continue to call for departing from a deflationary mindset, switching to aggressive management and creating new growth opportunities.
We think the response to the Trans-Pacific Partnership (TPP) will take center stage in the supplementary budget. Meanwhile, the business community believes that a number of policy responses are needed to attain a positive economic cycle. For example, we seek support for business activities through reduction in corporate taxes, and we feel that deregulation is not sufficient. Measures to promote capital investment and research and development investment are also necessary. Furthermore, we want the government to consider measures such as those to encourage consumer spending. Specifically, they include preferential tax treatment for acquiring energy-efficient housing and tax reductions on acquisitions related to automobiles equipped with new technologies, and we believe these will be subject to consideration for the supplementary budget.
As for the scope of budget, we want to refrain from presenting specific figures. On the other hand, a considerably drastic spending reform is necessary to tackle fiscal reconstruction and realize turning the primary balance into a surplus by 2020. We ask for maximum economic stimulus measures while maintaining a balance with this fiscal reconstruction.
A major premise for business activities is to gain the trust and confidence of consumers. Keidanren will continue to call on member companies that their top management take the lead in establishing a corporate governance structure and take measures toward thoroughly enforcing corporate ethics.
Measure to reduce burden of rise in consumption tax
We have expressed opposition to the introduction of reduced tax rates, and there is no change in our position. But it is the government that will decide this, and the introduction of reduced tax rates seems to be a premise. If the government is to introduce them, we hope it will consider the issue fully so that the administrative workload on small and medium-sized companies is not excessively increased. Also, the revenue that comes from increasing the consumption tax rate from 8% to 10% is supposed to be allocated to social security expenditure, so we hope the reduced tax rates will be introduced in a way that does not cut this revenue by a large margin. We will leave the choice of items subject to the reduced tax rates up to experts, but we believe a revenue decline of 1.3 trillion yen is indeed large.