- Trans-Pacific Partnership
- Spring Labor-Management Wage Dialogues
- Measures to Stimulate Consumption
- Facilitating Employment of Workers from Overseas
- Keidanren Delegation to the United States
- Japan-Russia Relations
The Trans-Pacific Partnership (TPP) is essential for peace and stability in the Asia-Pacific region, and is a critically important economic framework not only for Japan but also for the United States. The government needs to make efforts in various ways to gain the understanding of President-elect Trump regarding the importance of the TPP and his support for the TPP. The business community will urge relevant parties to make these efforts.
The TPP is a central pillar of Japan's growth strategy, and it is important that the TPP is realized according to the expected plan. Recently, the leaders of the countries participating in the TPP held a meeting on the margins of the APEC Economic Leaders' Meeting in Lima. They agreed that the countries would steadily proceed with their domestic procedures and encourage the United States to approve the TPP in Congress. The top priority is for the 11 countries excluding the United States to cooperate to call for ratification of the TPP by the United States.
Prime Minister Abe has stated that a TPP without the United States is meaningless. Keidanren is in full agreement. The United States accounts for approximately 60% of the GDP of the TPP signatory countries. If the largest economic power does not join the TPP, it will lose its significance. In addition, Japan has concluded bilateral agreements with many of the parties to the TPP, excluding the United States. In this regard, a TPP without the United States would have limited effects. There is significance to the U.S. accession, and Japan should make every effort to establish a TPP involving participation by 12 countries including the United States.
President-elect Trump hinted at concluding a bilateral agreement. However, the outcomes that can be reaped from multilateral negotiations and the outcomes that can be reaped from bilateral negotiations are totally different. The TPP is a quality comprehensive agreement covering a broad range of areas, including not only tariffs but also intellectual property rights and government procurement. Such multilateral agreements have immeasurable value.
Japan must pursue a major vision that first entails realizing the TPP, then concluding a Japan-China-Korea free trade agreement (FTA) and the Regional Comprehensive Economic Partnership (RCEP), and ultimately realizing the Free Trade Area of the Asia-Pacific (FTAAP). The TPP is absolutely critical for giving momentum to proceeding with this vision.
Spring Labor-Management Wage Dialogues
Recently, Prime Minister Abe requested wage increases during next year's spring labor-management wage dialogues. Specifically, the Prime Minister requested: (1) wage rises by at least the same level as the previous year and pay scale increases for the fourth consecutive year; and (2) discussion that takes account of the expected inflation rate. I responded that based on the recognition that the momentum for wage rises needs to be maintained in order to continue to bring about a virtuous economic cycle, the 2017 Report of the Committee on Management and Labor Policy that will be published in the beginning of the new year will present a clear stance of the business community.
As regards this year's corporate results, half of the companies probably had profit increases while the other half had profit decreases during the first half of the year. The exchange rate level, coupled with the slight stagnation of emerging economies, led to profit decreases especially among export companies. In the second half of the year, companies are showing signs of recovery, and we expect more companies will have profit increases for the full business year. If we look at corporate results not by a single business year but by multiple business years, corporate earnings have not slowed down and that the trend has been favorable. On the other hand, there will be companies that can and cannot implement pay scale increases under the current business environment. Particularly in the case of pay scale increases, once they are implemented, it has long-term effects on businesses in a variety of ways. For this reason, many companies give priority to improving employee terms and conditions reflecting corporate results, such as allowances and bonuses. In view of this situation, companies will likely aim to increase wages based on annual incomes, which does not exclude pay scale increases.
The business community has implemented pay scale increases for the past three years. Before that, pay scale increases were not implemented for more than five years. In light of social demands to bring about a virtuous economic cycle, we expect that next year, there will not be an across-the-board pay scale increase at all companies. It will be the companies that can implement pay scale increases that will do so. However, it is important that companies improve not only the pay scale but also the overall employee terms and conditions. Companies will seek to improve overall employee terms and conditions, such as allowances, bonuses, and working conditions, and in turn, stimulate consumption.
In Japan, labor-management wage dialogues have been conducted based on actual prices rather than the expected inflation rate. Keidanren needs to fully inform member companies about the request to take account of the expected inflation rate received from Prime Minister Abe and Governor Kuroda of the Bank of Japan. In the Report of the Committee on Management and Labor Policy, Keidanren will present the business community's view on labor-management wage dialogues based on the expected inflation rate.
Measures to Stimulate Consumption
Black Friday in the United States as a national campaign has been enormously successful. Keidanren's Committee on Consumer Goods and Services has been reviewing concrete measures to stimulate consumption. We hope to launch the "Premium Friday" campaign on the last Friday in February 2017, and to increase consumption on a national level. The implementation of this campaign will bring a turnaround in consumers' concerns about the future as well as conservative and protective consumption behavior. Keidanren will urge member companies to encourage their employees to leave work by around 3 p.m. at the latest on the last Friday of the month, and use the freed up time to do something special, such as going to the movie theater, dining out, or traveling. With the government also involved, Keidanren hopes to make Premium Friday a major event that will lead to expanding consumption.
Facilitating Employment of Workers from Overseas
With the population declining, the employment of workers from overseas is essential for maintaining and boosting the vitality of the Japanese economy and society. There is a shortage of highly skilled professionals as well as workers in certain industries. Against this backdrop, Keidanren has compiled recommendations regarding promotion of employment of highly skilled professionals that will lead to generating innovation and bolstering competitiveness and the workers necessary for industries such as nursing care, and regulatory reform to make them feasible. With regard to immigration, Keidanren recommended that this issue be considered now to prepare for the future instead of putting it off. The national discussion on immigration is still in its infancy. This issue must not be seen as a taboo and needs to be examined.
Keidanren Delegation to the United States
In the end of November, Keidanren will send a business delegation to Washington, D.C. The delegation will exchange views with politicians, experts, and members of think tanks such as the Center for Strategic and International Studies (CSIS) in order to fully gauge U.S. policies on politics, economics, and diplomacy under the new Trump administration. It has been eight years since the last Republican administration. The delegation will make efforts to form networks with members of the new Trump administration, as well as explain the significance and importance of the TPP from the perspective of the Japanese business community.
Prime Minister Abe and President Putin held their 15th summit meeting on the margins of the APEC Economic Leaders' Meeting in Lima. I respect their efforts to improve Japan-Russia relations. It seems that the summit meeting in Sochi in May began to pave the way towards solving the issues between the two countries. However, as the Prime Minister also stated, it is not easy to make a major stride towards solving these issues. Nonetheless, the meeting deepened the relationship of trust between the two leaders and set up opportunities for negotiation. The business community will provide various forms of support to realize the eight-point plan for economic cooperation. In Lima, the leaders confirmed with each other the progress of the eight-point plan for economic cooperation. The plan will be further expounded in the lead-up to President Putin's visit to Japan next month. The conclusion of a peace treaty between Japan and Russia is a key item that was not realized in the last 70 years. It will not be that easy to realize this. We hope that the two sides will steadily build upon their achievements and take a new major step forward at the leaders' meeting next month.