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

January 15, 2019

Spring Labor-Management Wage Dialogues

The Keidanren Special Committee on Management and Labor Policy is going to issue its report for 2019 next week. The key themes of the report are enhancing job satisfaction and generating innovation. Most attention has been focused on how to respond to government calls for wage increases, but I have long emphasized that companies with growing earnings should raise wages. I will continue urging member companies to take a positive approach to wage increases, according to their own circumstances. It is vital to encourage working style reform and to link this to enhanced employee motivation.

Wages send an important message to employees. Rather than simply regarding higher wages as better, employees should be aware of the market value of their work. Seniority-based wage systems founded on lifetime employment no longer suit current ways of working. As the Japanese population declines, we must raise productivity, or companies will face a tough situation. This sense of crisis forms the basis for the Special Committee's report. In an era of digital transformation, companies must boost the value added by their activities. Digitization is also changing the nature of work and we need to examine new ways of treating employees so that we can proactively respond to this change.

Labor and management are both reaching a turning point in spring labor-management wage dialogues. Labor unions may believe that collective bargaining for each industry is the most advantageous form of negotiation, but deciding wage increase levels industry-by-industry and negotiating uniformly are becoming outdated concepts. As digitization advances, conventional industry boundaries will change, and companies' ability to pay will vary from one enterprise to the next.

People often say wage dialogues are orchestrated by the government, as denoted by the term kansei shunto (官製春闘), but I disagree. To achieve economic growth, the government needs to take various measures aimed at stimulating individual consumption, which accounts for 60% of GDP. I am not negative about the government calling on business to raise wages, and I can understand their reasons for doing so.

Energy Issues

Japan faces a host of energy issues, including fulfilling the goals of the Strategic Energy Plan for 2030 and achieving emission reduction targets based on the Paris Agreement. Although the 24th Session of the Conference of the Parties to the UNFCCC (COP 24) faced challenges reconciling conflict between developed and developing countries, after an all-night session it succeeded in compiling a Rulebook for implementation of the Paris Agreement. At COP 24, Keidanren advocated efforts to reduce greenhouse gas (GHG) emissions throughout the global value chain.

Energy issues cut across organizational boundaries and concern not only the Agency for Natural Resources and Energy and the Ministry of Economy, Trade and Industry, but also other ministries including the Ministry of Foreign Affairs, Ministry of the Environment, and Ministry of Finance. The government, ministries and agencies, industry, and academia need to seriously discuss these matters.

In recent years, global warming has been cited as a factor behind more severe heat waves and natural disasters. Reducing GHG emissions is a global challenge. Nearly 90 percent of Japan's energy currently comes from fossil fuels. The international community does not view this situation favorably.

Lack of progress towards re-starting nuclear power plants has also been an immediate issue, and we should actively promote the resumption of nuclear power operations. Although safety issues have been exhaustively discussed, the understanding of local communities has still not been gained. Electricity providers cannot take sole responsibility for convincing all stakeholders, and broad public debate is required. Despite this, in-depth discussion of nuclear power is lacking.

We should dispassionately consider, from a long-term perspective, what energy sources people would use if Japan were to abandon nuclear power as a source of base-load electricity. It is not possible to meet this need with renewable energy alone. We should use nuclear power technology effectively for the sake of humankind.

Cyber Security

No matter how many protective measures are put in place, hackers find new ways to launch cyber-attacks. Japan as a whole needs to take more stringent cyber security measures. Keidanren has made a number of policy proposals, including the Declaration of Cyber Security Management. The government has responded with enhanced efforts, but the cyber-attackers are also advancing. We will make louder calls for countermeasures.

Companies Act

The government is deliberating draft revisions to the Companies Act with a focus on issues including mandatory appointment of outside directors and disclosure of directors' remuneration. While I do not oppose such provisions, I question whether they need to be determined by law. Companies have responsibilities toward their shareholders. Shouldn't shareholders decide such matters without being bound by laws? Governance is one of the requirements of ESG investment, and companies without sound governance will not attract investors.

Executives' Comments