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

January 22, 2018

Spring Labor-Management Wage Dialogues

The key priorities for this year's labor-management wage dialogues are working style reform and wage increases. The 2018 report of the Keidanren Special Committee on Management and Labor Policy sets out the business community's thoughts on working style reform. A bill on working style reform will be submitted during the current Diet session. Placing upper limits on overtime, in particular, represents one of the most ground-breaking revisions in the 70-year history of the Labor Standards Act, and is a crucial theme of working style reform. We encourage labor and management to thoroughly and proactively explore responses to new regulations, without waiting for the Diet to pass the bill.

Over the past four years, companies have kept up wages increases within the 2% range, or more than \7,000 per month. While maintaining such wage rise momentum, this year wage increases need to be stepped up another notch. The figure of 3% has grabbed headlines, partly because it was stated by Prime Minister Abe as his expectation, but I perceive it as a symbolic number. Bearing this in mind, rather than regarding the figure of 3% as a prime ministerial instruction, Keidanren has referred to it as one target amid broad discussion about ways to stimulate consumption and generate a virtuous economic cycle. Although wage increases in the 2% range have been achieved, consumption remains sluggish. In these circumstances, wage increases of 3% would change consumer perceptions. From that standpoint, this year's Committee on Management and Labor Policy report includes quite ambitious guidelines.

Wage dialogue outcomes will be determined by labor-management negotiations at individual companies. Recent corporate results reveal a trend towards higher earnings and profits than a year ago at many companies, including some that have set new profit records. There is no doubt that corporate profitability has improved over the last two or three years. Although storing corporate internal reserves is a much-debated issue, such reserves are substantial. These higher reserves have created an environment enabling wage increases. However, as I have stated repeatedly, decisions on wages depend on labor-management dialogue at each company. Outcomes cannot, and should not, be projected. The nature of wage rises does not allow companies to set a target and strive to achieve it. Wage rises are the sum of labor-management dialogue outcomes at individual companies. Thus 3% is an important aim, but ultimately it is a guidepost rather than a goal that must be met.

Rectifying Long Working Hours

A culture of long working hours underpinned Japan's post-war economic revival and was a source of competitiveness for Japanese companies. In such a climate, people even worked 150 or 200 hours of overtime a month as a matter of course. However, this is no reason for continuing to work long hours. The past is behind us, and we need to change working styles to improve productivity and produce results in shorter times. This is the essence of working style reform. In European and American companies, many people go home when their working hours end, sometimes excusing themselves from meetings to do so, but that does not result in poor corporate performance. This is a difference in working styles, and Japanese companies should incorporate the positive points of such styles. Changing ingrained habits is not easy and requires great effort, but it is vital to take working style reform as an opportunity to alter ways of working at Japanese companies. I understand some difficult challenges exist: employees will receive lower overtime pay and decreasing working hours is very difficult for some small and medium-sized companies, which are troubled by labor shortages, but labor and management need to devise solutions.

Exemption of Highly Skilled Workers from Job Performance Evaluation based on Working Hours

A new working style for highly skilled workers, which the government will discuss in the Diet, values outcomes rather than working hours. It provides flexible working options for specialized occupational groups in fields such as R&D and marketing. Health protection measures have been reinforced in line with union requests, and checks have been placed on excessive work. In the US and Europe, it is taken for granted that work will be evaluated on outcomes rather than time spent. Such measures complement efforts to rectify long working hours rather than impeding them. Working without regard for time requires productivity improvements. If productivity is enhanced, labor and management need to discuss ways of returning such gains to employees in some form via their working conditions.

Bank of Japan 2% Inflation Target

The Bank of Japan has pushed back the timeline for achieving its 2% inflation target several times. I consider 2% itself is a suitable target. Setting aside the timeline for meeting it, current monetary policy is appropriate, and now is not the time to discuss the pros and cons of the target figure. Moreover, supply outstripped demand for more than a decade, but last year the situation was reversed. Demand now exceeds supply, and personal consumption has shown vitality in December and January. The economic environment is moving in the direction of price rises.

Expectations for the Diet Session

Many important bills are scheduled for submission to the current regular session of the Diet, but the most pressing issue is to pass the fiscal 2017 supplementary budget and the fiscal 2018 budget. Also, labor and management have devoted much time to examining and agreeing the bill on working style reform, and it should be passed into law in line with their discussions. The business community is also interested in the integrated resort bill. We hope that such important bills will be deliberated as promptly as possible, and that important policy agendas will move ahead.

Osaka World Expo Bid

I understand that there have been reports of France withdrawing its bid to host the 2025 World Expo, but this has not yet been formally announced by the French government and needs to be confirmed. If France does intend to withdraw, we will devote even greater energy to our activities until the Bureau International des Expositions General Assembly takes place in November, and continue making the utmost effort to win hosting rights.

Executives' Comments