- Politics
- The Exchange Rate
- The Minimum Wage
- Choice of Separate Surnames for Married Couples
- Utility Bill Subsidies
Politics
(In response to a question regarding the Kishida Cabinet's currently low approval rating) The Kishida Cabinet has enthusiastically and steadfastly hammered out a series of initiatives aimed at fully freeing the economy from deflationary forces and ultimately achieving a favorable cycle of growth and profit-sharing. Those efforts have yielded results. For example, in fiscal 2023, nominal GDP hit 599 trillion yen, a record high, and though wages last year saw their strongest hikes in 30 years, the increases this year have even topped that pace. Although its current approval rating has been encumbered by recent issues in political funding, I think the Cabinet deserves credit for the steady progress it has shown in domestic affairs and on the foreign relations front.
That said, given that the approval rating does reflect public opinion, my hope is that the Cabinet will heed the implications and move forward quickly with efforts toward political reform.
(In response to a question seeking the Chairman's views on passage of the amended Political Funds Control Act enacted on June 19) Regarding the issues surrounding political funding, it is important to ensure transparency and effectiveness. My impression is that this latest revision to the law does ensure a certain measure of transparency. I would like to see the Diet follow up with swift deliberation and action on related matters, such as placing a cap on policy activity funds and setting up a third-party body to monitor those funds. Moving forward, I want our lawmakers to bear the recent spate of funding scandals in mind and ensure full compliance with the letter and spirit of the law.
On other matters of relevance to the nature of funding from corporate and organizational donors, I would have liked to see the opposition and ruling parties pursue deeper deliberations on the relationships between politics and money and sharing the burden of costs associated with sustaining a political democracy.
The Exchange Rate
(In response to a question about actions needed to reverse the weakening trend in the yen) The gap between real US and Japanese interest rates is one of the key factors behind the current weakness in the yen. However, given expectations that this bilateral rate gap will likely shrink over the medium and longer term, I suspect the current weakness in the yen has basically run its course.
Beyond that, strengthening Japan's economic fundamentals will be one of the steps needed to put the yen back on a firming track. Further, Japan needs to roll out effective medium- and long-term initiatives aimed at boosting the potential growth rate, and actions must be taken through public—private cooperation to step up domestic investments that will help resolve a range of societal challenges. Fiscal health is yet another issue. In its Basic Policy on Economic and Fiscal Management and Reform 2024 (Basic Policy), the Japanese government has laid out policies aimed at achieving a primary balance surplus in central and local government finances by fiscal 2025. In keeping with that initiative and from the standpoint of protecting Japan's credit rating, steps to buttress its fiscal base will be a must.
(In response to a question inquiring into the Chairman's hopes regarding future policy actions by the government and the Bank of Japan to redress the soft trend in the yen) Generally speaking, deliberations on monetary policy should take prices into account. It is true that the exchange rate has been influenced by the gap between real US and Japanese interest rates. I want the BoJ to keep this fact in mind as well, and implement appropriate policies aimed at achieving a suitable price inflation level of around two percent.
I believe the government also can achieve a measure of effectiveness by demonstrating a firm resolve to intervene in the forex market if necessary.
The Minimum Wage
(In response to a question regarding the Chairman's interest in seeing debate within the Minimum Wages Council on regional minimum wages in fiscal 2024) Hard figures proposed for the minimum wage can be expected to come out following negotiations, and I am hoping the government, labor unions, and employers will pursue an exhaustive discussion on this issue.
The minimum wage is determined by law, and that law must be observed. It will be important to develop an environment that enables medium and small-scale businesses (the enterprises more likely to be directly impacted by wage hikes) to pay higher wages. To that end, I would like to see the government speed up its measures in assistance to help SMEs recover and boost their productivity.
Additionally, it will be necessary to promote appropriate levels of cost pass-through, including labor costs. In May this year, Keidanren revised its Charter of Corporate Behavior and called on its member companies to pursue fairness in their business transactions as a social norm, in compliance with the Declaration of Partnership Building. Going forward, Keidanren will strive to fully familiarize its member companies with these revisions and continue encouraging all to put the spirit of the Charter into practice.
In this context, the government has stated that efforts will be made to raise the national weighted-average minimum wage to 1,500 yen, sooner than the mid-2030s target date set forth under its Basic Policy, and my impression is that it will move in that direction.
(In response to a question seeking the Chairman's thoughts on the current regional competition over regionally established minimum wage levels and the approach used to determine region-specific minimum wages in the first place) Labor shortages at the regional level have become severe. My impression is that this has led some local governments to increasingly set minimum wages that take wage trends in neighboring regions into account, with the idea of attracting more human resources and stemming the drain from their own labor pools.
In setting regional minimum wages, I believe the Minimum Wages Council, as a body comprised of members from government, the labor unions, and employers, will need to engage in respectful discussions that comprehensively consider a range of factors, including price trends, the direction in monthly wage hikes, and the ability of companies to meet their wage payment obligations.
Choice of Separate Surnames for Married Couples
(In response to a question regarding the outlook for government action to implement a system that allows spouses to use their given surnames at birth) The share of households in Japan with a full-time homemaker has fallen below 30 percent, while the percentage of dual-earner households has climbed beyond 70 percent. Steps in system reform are needed to reflect this societal transformation and accelerate the participation of women in the workforce.
Discussing and debating this issue will be an important first step. I am aware that opinions within the LDP are divided on this subject, but even Diet members in the ruling party who supported the protection of Japanese "family values" have come up with proposals that improvise ways of facilitating the wider acceptance and use of former surnames. Everyone is on the same page when it comes to encouraging the participation of women in the workforce. All matters should be resolved through open debate, and in that spirit, I want the government to pursue open and speedy discussions on this issue.
Utility Bill Subsidies
(In response to a question about the need for the government to resume electricity and gas utility bill subsidies for households [announced on June 21], and concerns that such subsidies could become normalized) I doubt that the government has any intention of normalizing those subsidies. Rather, the idea of resuming them seems to reflect the government's determination not to miss this opportunity now that the economy is so close to fully shaking off deflationary pressures.
On the other hand, the government also plans to resume operations at nuclear power plants deemed safe, assuming it wins the understanding of the local communities affected, and it has announced the formulation of a new national strategy promoting a green transformation (GX). It is crucial that short-term undertakings be coupled with the pursuit of medium- and longer-term initiatives in this area.