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

January 28, 2019

Spring Labor-Management Wage Dialogues

There is a direct connection between digital transformation and working style reform. Amid dramatic changes in industrial structure, management and employees alike must face the reality that work is changing. Both management and labor are at a key turning point. This is the principal message of this year's report of the Keidanren Special Committee on Management and Labor Policy. Discussion of working style reform tends to focus solely on boosting labor productivity, but labor and management need to discuss the significance of working style reform based on awareness of changes in work and working styles as digitization progresses.

The above report shows that pay scale increases are one option for wage rises, and they are important for some companies. The report does not oppose pay scale increases, nor does it oppose wage rises. Wages are the most meaningful message that a company can give to its employees, and a natural way of rewarding employees who produce results. Management shares this view. While some industries are affected by factors such as trade friction between the US and China, others are not. Although an uncertain outlook may place psychological pressure on management, it does not have a direct impact on labor-management wage dialogues.

The business environment varies greatly from one company to another. For example, unless the electrical machinery industry can innovate, it will not open up fresh prospects for the future and business performance will rely heavily on employee motivation. Conversely, in other industries the cumulative results of steady day-to-day work are the key to improving performance. Companies and industries are becoming more diverse. Their approaches to pay scale increases will depend on each company's own circumstances.

Possibilities exist for companies that embrace challenges, and the thought that giving up would push the company to the wall is bound to stimulate any manager. The issue for management is how to enhance the drive and motivation of workers.

Energy Issues

Japan holds the G20 chair this year. In the wake of COP24, the international community is watching Japan's stance on achieving greenhouse gas (GHG) reduction targets based on the Paris Agreement and observing the steps it will take. However, Japan has not yet indicated any specific milestones toward long-term, significant GHG reductions. Rather than simply considering the energy portfolio, we need to show our country and the world how we plan to tackle global warming for the future. How will the Japanese government advance concrete discussion of environmental and energy issues at the G20? What results will it achieve? What message will it give to the G20 energy ministers meeting? These are major challenges.

Grid requirements present obstacles to expansion of renewable energy, and investment in the electric power sector is stagnant. Overcoming these issues will be a further challenge. We need to consider establishing fee structures adapted to distributed energy systems. Japan lacks land suited to both solar and wind power, which hampers large-scale use of these resources. Unique climatic conditions also present barriers to widespread use of renewables, such as seasonal fluctuations in solar-power generation volumes and damage to wind power facilities due to frequent typhoons.

The first step towards gaining public understanding will be for business leaders, politicians, and government officials to recognize and discuss these issues. Japan lacks resources, and if these issues remain unaddressed the country will continue to face major difficulties and come to a standstill. Public discussion of the entire energy situation is required, and Keidanren has compiled policy proposals to spur such debate.

Dialogue with Universities

The first meeting of the Industry-Academia Council on the Future of Recruitment and University Education will take place soon. This is the first Keidanren initiative to engage in dialogue with universities within such a framework. We will convey the business community's views on a wide range of questions.

Monthly Labor Survey

The deplorable revelation of erroneous labor statistics is a problem with consequences that spread even to insurance benefits. Statistics must be based on reliable surveys, and I hope that the Ministry of Health, Labour and Welfare will take rigorous practical steps to prevent any recurrence of such problems.

Japan-EU EPA

The Japan-EU Economic Partnership Agreement comes into effect on February 1, and the international community has commended this highly significant accord. The combined economic scale of Japan and the EU is massive. In the face of rising protectionism, the agreement sends a strong message that Japan and Europe will adhere to the principles of free trade.

Davos Meeting

Last week I attended the annual meeting of the World Economic Forum in Davos. Amid geopolitical and geoeconomic instability reflected in the volatility of financial and capital markets around the 2018 year-end, attendees were able to constructively discuss ways of promoting digital transformation and steadfastly maintaining free trade.

Japan exerted a strong presence at this year's gathering in Davos, largely owing to the stability of the Abe administration. Prime Minister Abe delivered a powerful message on promotion of free trade. The TPP 11 agreement came into effect at the end of 2018, and the Japan-EU EPA takes effect on February 1. Japan must display leadership in advancing free trade.

Prime Minister Abe also set direction for deeper international collaboration in data governance by describing the concept of "Data Free Flow with Trust," or DFFT. Japan is increasingly expected to take the initiative in this field as well.

I joined Minister of Economy, Trade and Industry Hiroshige Seko and University of Tokyo President Makoto Gonokami to brief the media on Society 5.0 and showcase Japan's commitment to close collaboration by government, academia, and industry to promote digital transformation aimed at bringing the vision of Society 5.0 to reality. The Davos meeting heightened expectations on Japan. We must fulfil the hopes of the international community and drive economic growth for Japan and the world as a whole.

Executives' Comments