Japan's high-cost economy is due in part to the government's bureaucratic system, which includes 10,000 regulations and imposes the world's highest corporation tax, in part to corporate practices, such as uniquely Japanese business practices, like Keiretsu, and in part to Japanese consumer preferences for very high quality products and for comprehensive protective regulations.
As for corporate practices, businesses are making all-out efforts to reform in order to survive the mega-competition of global business. Consumers, it would appear, have become even more demanding in respect to quality, performance and price. Regarding the government bureaucracy, however, reform is not making much headway, due to the formidable "wall" of vested interests.
Moreover, despite the progress in "price smashing" in the marketplace in response to the recession, public utility rates are increased. Under these circumstances, Japanese as well as foreign firms are moving financial, telecommunications and transportation bases out of Japan into other Asian nations to escape the high costs of doing business and of regulations. And Asian corporations are listing their stock not in Tokyo -- but in New York. It is so-called "Japan-passing" phenomenon.
However, the rigidity of the personnel system deprives individuals of the chance to make a new start in their careers, and, on the national level, restricts the movement of human resources into potential high-growth industries. This rigidity is preventing Japan's mature economy from creating new industries and businesses and from revitalizing the society through the restructuring of the industrial base. On the other hand, however, there are signs that perceptions and attitudes regarding employment are becoming more diverse, particularly among the younger generation.