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

May 10, 2021

1. Current Conditions of and Outlook for the Japanese Economy

Due to the declaration of a third state of emergency, the Japanese economy remains in a severe situation, especially in the face-to-face service sector. However, the upswing in exports and production continues as overseas economies rebound.

Looking ahead, economies are projected to rally, especially in the manufacturing sector. The pace of recovery will depend on the spread of COVID-19, including new variants, and the roll-out of vaccines in Japan and abroad.

Even under a state of emergency declaration, the government and private sectors need to band together to prevent infection and maintain economic activity. The government will need to act swiftly to implement the necessary measures in areas such as keeping corporate businesses going and maintaining employment, expanding the healthcare provision system, taking steps to implement the vaccination of large numbers of citizens smoothly, appropriately easing immigration restrictions, and considering vaccination passports. The business community, for its part, will cooperate proactively in preventing infection and restoring the economy to a normal footing by, for instance, complying fully with guidelines on matters such as implementing telework.

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

We will create a virtuous economic and environmental cycle with the aim of achieving carbon neutrality by 2050. With green growth as a pillar of national strategy, while working to cooperate internationally, 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 strive to build advanced and resilient energy systems. 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.

The public and private sectors will collaborate in strengthening efforts to create a circular economy through the activities of the Circular Economy Partnership established by Keidanren, the Ministry of the Environment, and the Ministry of Economy, Trade and Industry.

5. Work Style Reform and Human Resource Development

With no end to COVID-19 infections in sight, we will continue urging our member 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 special measures for the employment adjustment subsidy and the industry employment stability subsidy. Once special provisions have been established for regions where COVID-19 infections are spreading and companies that are suffering severe deterioration in business conditions, the special measures for the employment adjustment subsidy for May and June will gradually be scaled back. Provided that the employment situation does not deteriorate markedly, special measures will be further scaled back and, as the financial resources needed for the employment insurance system 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.

Following the release in April 2021 of the fiscal 2020 report of the Industry-Academia Council on the Future of Recruitment and University Education, we will implement the fiscal 2021 Action Plan, including promotion of hybrid-style university education combining face-to-face and remote learning, expansion of recurrent education in partnership with universities and other institutions, and trialing of internships leading to job-based recruitment. Through such initiatives, industry and universities will cooperate in developing human resources to support Society 5.0. We will also aim to expand implementation of new internships through efforts such as promoting understanding of all types of career planning support activities for students.

6. Regional Revitalization

In conjunction with the spread of COVID-19 infections, we will harness the expansion of new work styles such as telework and strive to generate population flows to the regions. We will strengthen ties with key players in the regions, such as regional business groups, local governments, and universities, and promote regional development that will attract people by making use of regional resources and digital transformation.

From the perspective of rectifying over-concentration of population in major cities and raising the resilience of Japan as a whole, we will also examine administrative systems that will contribute to advancing widespread cooperation among regional local governments.

7. Economic Relations with Major Industrial Powers

We will call for close international cooperation and promote collaboration with business communities in other countries to overcome the COVID-19 pandemic, achieve swift economic recovery, restore a free and open international economic order, and resolve a range of global issues.

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 earned by management that respects human rights, 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 decisive reforms to the WTO, which serves as the core of the multilateral system of free trade, under the leadership of its new Director-General. 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