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Policy Proposals  Comprehensive Strategy Approaches to Current Issues ( February 2021 )

February 8, 2021
Keidanren

1. Current Conditions of and Outlook for the Japanese Economy

The Japanese economy is currently in a severe situation due to significant contraction of economic activities both in Japan and overseas as a result of the spread of COVID-19. The downturn bottomed out in May last year when the state of emergency was lifted, and a recovery was under way. However, a new state of emergency was declared in January this year, resulting in strong downward pressure on the recovery trend.

Looking ahead, continuation of the economic rally will depend largely on the spread of COVID-19 in Japan and abroad from now on. The duration of Japan's renewed state of emergency is to be extended, giving rise to concerns about business continuity and a worsening of the employment situation in those industries that will be most severely impacted.

The first priority is for the government and private sector to band together to maintain rigorous measures to prevent infection while keeping the impact on the economy to a minimum. The government will need to act swiftly to implement the necessary measures in areas such as keeping corporate businesses going and maintaining employment, securing the healthcare provision system, starting a vaccination program quickly, and taking steps to implement the vaccination of large numbers of citizens smoothly. Other examples of areas to be addressed are expansion of PCR testing capacity and easing of immigration restrictions. The business community, for its part, will cooperate proactively by, for instance, complying fully with guidelines, such as the guideline on implementing telework, and providing assistance to medical institutions and public health centers.

2. Growth Strategy Targeting the Post-pandemic Era

The COVID-19 pandemic has highlighted the limitations of a doctrine of shareholder supremacy, symbolized by problems such as disparities and global environmental issues, which were already worsening before the pandemic. In tandem with short-term measures aimed at balancing suppression of the COVID-19 pandemic with continued economic activity, there will be a need to work on a growth strategy for establishing sustainable capitalism through inclusion of, and collaborative creation with, all stakeholders. Keidanren's new growth strategy sets out five action targets for 2030: new growth through digital transformation, workstyle reform, regional revitalization, rebuilding of the international economic order, and green growth. To fulfill our vision for a future society, we will move resolutely to implement these actions, starting with those that are immediately possible.

3. Realizing Society 5.0 through the Acceleration of Digital Transformation

It has been proven in many countries that digital transformation is extremely effective for preventing the spread of COVID-19. We will promote thorough regulatory reforms, digitization, data sharing, and other relevant steps in the medical services, education, public administration, finance, industry, and other sectors in order to build a resilient economy and society. In the middle- and long-term, we will solve various social problems through digital transformation in order to build a more humane and happy society, i.e., realize Society 5.0. Toward this end, Keidanren as a whole will deliberate on a concrete vision for overcoming the COVID-19 pandemic through digital transformation and building Society 5.0 as a new social model for the post-COVID-19 era, then study and implement the steps toward realizing this vision. We will work on the digital agency which will be established to consider these agendas.

4. Rebuilding Energy and Environmental Policy

In the aim of achieving carbon neutrality by 2050 as we work to create a virtuous economic and environmental cycle, we will strive to innovate and build advanced and resilient energy systems. With green growth as a pillar of national strategy, the government and the private sector will work together to promote climate change policies focused on innovation through "Challenge Zero" and other initiatives. While providing input to discussion of matters including revision of the Strategic Energy Plan, we will work towards creating an environment conducive to investment in electric power, introducing next-generation power transmission and distribution networks, making renewables into Japan's main sources of power, and re-starting nuclear power plants once safety has been assured.

5. Work Style Reform and Human Resource Development

We will continue urging companies to maintain employment through measures such as schemes for temporarily assigning employees to other companies while keeping their positions at the original company. This will be done primarily by taking advantage of the new industry employment stability subsidy that is to be established, in addition to the special measures for the employment adjustment subsidy. We welcome the government's indication that it plans to extend the special measures for the employment adjustment subsidy until the end of the month following the month in which the state of emergency declaration is revoked throughout Japan. On the other hand, as the necessary financial resources are now depleted, we call upon the government for a bold injection of funds from general revenue sources.

We will also focus on improving employee engagement and promote the extension of work style reforms. As part of these efforts, we will examine personnel evaluation and labor management issues arising from telework to promote working methods not reliant on place and time, and aim to create new working hours systems suited to autonomous, self-directed work styles, such as expansion of eligibility for the systems on discretionary working hours.

We will implement Action Plan 10 compiled by the Industry-Academia Council on the Future of Recruitment and University Education, including establishing a shared understanding between industry and academia regarding new styles of internships, implementation of internships leading to job-based recruitment, summarizing of issues relating to online education, expansion of recurrent education in partnership with universities and other institutions, and promotion of joint industry-university partnerships on an organization-to-organization basis. Through such initiatives, industry and universities will cooperate in developing human resources to support Society 5.0.

6. Spring Labor-Management Negotiations and Discussions

In the lead-up to the 2021 spring labor-management negotiations and discussions, which will be held in the midst of a full-scale pandemic, keeping business continuity and maintenance of employment at top of mind, we will use the report of the Keidanren Special Committee on Management and Labor Policy and other avenues to call on participants to respond in ways that are appropriate to their individual company's circumstances, in accordance with the fundamental principle of wage determination. At the same time, from the perspective of increasing worker engagement, we will encourage comprehensive improvements to employee treatment that will contribute to the maintenance of employees' health and to assistance for self-directed career planning.

7. Economic Relations with Major Industrial Powers

We will promote cooperation with other countries to prevent the spread of COVID-19 and in the resumption of economic activities, including movement of people across borders.

We will communicate closely with the United States at various levels in the aim of further strengthening Japan-US relations under the new US administration. We will continuously aim to expand trade and investment with EU nations and with the United Kingdom under the EPA between Japan and the UK, which is now in force, and the UK-EU FTA that has come into provisional effect. We will participate in materializing the eight-point cooperation plan with Russia, as well as continuing to appeal for improvement of the business environment in Russia.

We will strive to maintain and further develop economic relations with countries and regions including China, which is Japan's largest trading partner, India, where further growth is expected, and the ASEAN economies, which harbor diverse potential. In partnership with other countries, we will aim to achieve a free and open Indo-Pacific.

8. Sustaining and Reinforcing the Rule-based International Economic Order

Through resistance of protectionist moves that have arisen from the COVID-19 pandemic and promotion of international cooperation based on trust, we will achieve free and open trade and investment while living with coronavirus. As part of such efforts, Keidanren will seek to aid in the development of rules for trade and investment in the Asia-Pacific region. To that end, it will urge early effectuation of the RCEP and participation by India in this partnership, and call for expanded participation in the CPTPP, including prompt recognition of the UK as a member and the reinstatement of the US, as well as the early establishment of the Japan-China-South Korea Free Trade Agreement. Additionally, we will push for reforms to the WTO, which serves as the core of the multilateral system of free trade. Furthermore, we will cooperate with the government to re-start overseas infrastructure projects suspended or delayed by the impacts of COVID-19 and, to encourage expanded exports of quality infrastructure-related goods, we will engage in facilitating cooperative relations through policy dialogues with public- and private-sector leaders in Japan and other countries in the region. As a prerequisite to such efforts, we will collaborate with the government to ensure economic security.

9. Hosting Successful National Events

We will work in unison with the government and relevant organizations to aim for the successful hosting of the Tokyo Olympics and Paralympics this summer, and link these efforts to the revitalization of Japan's economy and its subsequent growth.

10. Disaster Prevention and Mitigation, and Building National Resilience

In light of the COVID-19 pandemic and major natural disasters that have occurred in recent years, Japan will do all it can to not only help the infected patients and those caught up in disasters and rehabilitate local regions, but also to prevent and mitigate disasters, build national resilience, and support and sustain businesses.

To further improve the resilience of Japan's economy and society, we will urge the government to steadily execute its policies, and at the same time encourage companies to also take action to ensure business continuity, such as drawing up business continuity plans that anticipate all potential hazards and building the resilience of their supply chains.

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Comprehensive Strategy