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Executives' Comments  Press Conferences Chairman Sakakibara's Statements and Comments
at His Press Conference

February 24, 2016

Economic situation

With the yen appreciating and stock market prices sagging further, the foreign exchange rate has crossed the 112 yen line against the U.S. dollar and stock prices stay below 16,000 points on the Nikkei index. But both levels are far from the real economy. Japan's fundamental economic strength is solid and we see the present developments as market players' excessive reactions to anxiety over future prospects. Exchange rates presumed by many companies as a basis of their business operations are around 118 yen per dollar. If we are to approach the end of the current fiscal year next month at the present exchange rate, it would directly affect corporate earnings performance. We would like to expect the exchange and stock markets to return to levels reflecting Japan's real economic situation.

As for the impact of the current negative interest rate policy, it is necessary to evaluate it from a bit long-term perspective. On the surface, it appears that it had good effects in the first three days after it was adopted by the Bank of Japan but that they have since tapered off. But the policy is beginning to have favorable effects such as declines in bank lending rates and home mortgage loan rates. Its impact on bank management is not as great as worried initially. It is time now to employ each and every measure available for economic rebirth and we welcome the Bank of Japan's response under such circumstances. We would like to expect the policy to produce effects for a favorable economic cycle.

Equal pay for equal work

If we are to find unreasonable wage gaps according to different forms of employment such as permanent and non-regular workers, we should seek to resolve such disparities. This is necessary to ensure a virtuous economic cycle as well, and we called for increases in hourly wages for non-regular workers and their employment as permanent staff in this year's report by the Committee on Management and Labor Policy. Member companies of Keidanren are making efforts to do so. As for the government's call for equal pay for equal work, it is essential to make it a system matching Japan's employment practices. Many Japanese companies decide wages by taking into account not only the details of work and job responsibility of each individual but also expectations, roles and utilization of human resources including job relocations. This is one of the sources of Japanese corporate competitiveness. It is necessary to discuss the issue on the basis of employment practices in this country, not just paying equal wages simply for equal content of work. Prime Minister Shinzo Abe has said the government will seek to have the proposed scheme of equal pay for equal work put into shape while respecting Japan's employment practices. The business community thinks that the government has understood the fundamental concept of the employment practices and is looking in the same direction as we are.

Recruitment and employment of new college graduates

Last year's schedule for recruitment campaigns for new college graduates that started in March and for the selection process that began in August resulted in a prolonged period of publicity activities and other problems, turning out to be heavy burdens on both students and companies. As a result, Keidanren has decided to bring forward the start of employment screening by its member companies by two months to June this year to improve the business community's hiring practice as much as possible. We are going to enter a recruitment and employment period under the new schedule for the first time this year, and hope to see that the problems as singled out will be minimized.

We will undertake a follow-up survey after the end of this year's recruiting and employing period under the new schedule. Based on the results of the fact-finding survey, we may review the practice again, if deemed necessary, but we don't assume another review as a precondition. There are various arguments over recruitment and employment activities, including calls for year-round recruitment, but we think certain rules are necessary.

Corporate tax incentives

Some quarters point out that policy-based tax cuts for businesses implemented in fiscal 2014 were double their fiscal 2012 levels. One factor behind the difference was the presence of many red-ink companies in fiscal 2012.

Meanwhile, of such tax incentives in fiscal 2014 through March 2015 totaling 1,200 billion yen, 670 billion yen was based on an R&D promotion scheme and major companies accounted for much of this amount. But there is a dispute over the R&D tax scheme, questioning if it is a policy-based tax incentive in the first place. Some foreign countries have such a tax scheme offering incentives greater than in Japan and in place as part of their main corporate tax rules rather than as a supplementary one. Based on the belief that corporate R&D is a source of competitiveness and that innovation in itself is a driving force of economic growth, Keidanren is asserting that the R&D tax scheme should be made one of main corporate tax rules. Furthermore, companies enjoy the benefit of tax reduction as a result of massive R&D investment and have expanded such investment that much.

Restart of nuclear power plants

The Nos. 1 and 2 units at the Takahama nuclear power plant are now expected to resume operations for the first time as aging reactors. We consider that this prospect has arisen as a result of objective and scientific screening in line with the Nuclear Regulation Authority's safety standards, said to be the strictest in the world. We would expect that nuclear reactors will be allowed to restart once they clear strict safety screening, irrespective of the number of years they have been in operation.


Whether Britain will remain in the European Union or not is a matter to be decided by British people in an in-out referendum to be held on June 23.

We have been told by the British business community that staying as an EU member will lead to the UK's prosperity because being part of the EU's single market enables businesses tariff-free access to the market of 500 million consumers, and is a cornerstone of the country's economic growth.

For Japanese companies, the UK is the second largest destination of their investment on a flow basis after the United States, with about 10 trillion yen worth of investment on a stock basis. In order to protect their interests, the Japanese business community hopes that the UK will remain in the EU. We believe that it will be desirable for the EU as well for the UK itself that the UK stays with the EU. Should the UK decide to leave the EU, it could adversely affect the world economy as a whole.

Issues over ruling party members

I will not comment on individual issues as pointed out regarding some ruling party members. However, as Cabinet ministers and Diet members who are in positions to play roles in national politics and protect the lives of people, imprudent words and deeds must not happen. They are required to be self-disciplined, study hard and speak only after confirming factual situations. At the same time, they must be responsible for what they say. Their words and deeds must not be allowed to affect government administration and Diet deliberations. In this regard, we would like to offer candid advice as a business community. We hope they will discipline themselves as politicians and we sincerely desire to see no more problems will ensue.

In the current Diet session, not only the national budget for the coming fiscal year but also many important bills are pending. Diet deliberations must not be delayed by developments far from policy debate. Fortunately, the Diet has paved the way for approving the fiscal 2016 budget within the current fiscal year ending on March 31. It is important to pass other important bills without delay as well.

Merger between DPJ, Japan Innovation Party

Generally speaking, it is good to see the emergence of an opposition party capable of assuming the reins of government as it will provide voters with a new choice. But political parties must not seek to muster Diet strength simply to win a general election. It is important for political parties to pursue a merger on the basis of shared fundamental ideals and policies. As for the projected merger between the Democratic Party of Japan (DPJ) and the Japan Innovation Party, there are many aspects yet to be seen such as policies to be advocated, and it is too early to speak more than in general terms. We would like to keep watch on further developments.

Executives' Comments