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Policy Proposals  Comprehensive Strategy Aim for Sustainable Capitalism through ". The NEW Growth Strategy" Keidanren Policy for Fiscal 2021

June 1, 2021

Capitalism has reached a major turning point. The worldwide spread of the novel coronavirus (COVID-19) has not only struck a massive blow to the global economy; it has also exacerbated the economic disparities that were already worsening under conventional capitalism. Environmental issues were also worsening under this form of capitalism. The COVID-19 crisis has exposed the limitations of the conventional capitalism. The most urgent task now is to boldly invest policy resources to bring the pandemic under control, prioritizing rapid development, supply, and administration of vaccines through collaboration and coordination among countries. At the same time, it is necessary to look ahead to a new post-COVID-19 era and set out policies for resolving a variety of social issues, securing understanding and support throughout all levels of Japanese society to put these policies into practice.

In November 2020, Keidanren announced ". The NEW Growth Strategy" (referred to hereafter as "the new growth strategy"), intended to put a period to conventional growth strategies and to indicate a new one. This strategy advocates sustainable capitalism as a new form of capitalism, and argues forcefully for the need to respond to the increasingly diverse and complex demands of stakeholders as well as to include and co-create different forms of value in order to evolve capitalism as a means of overcoming the COVID-19 crisis and achieving sustainable growth.

Under these new guidelines, members of the business community, as key players within capitalist society, have a duty to act with greater speed and initiative than ever before to help resolve social issues such as economic disparity and climate change through their own business activities. They should implement future-oriented initiatives to spur unprecedented innovation and recover the momentum for growth, relying on multifaceted, multilevel collaboration with a diverse range of players, including industrial, academic, and governmental entities, as well as start-ups. In doing so, the key will be to advance digitalization in every field of human intelligence, the economy, and society, using digital transformation (DX) to reveal issues and generate solutions. The result of such initiatives will be none other than the human-centric "Society 5.0 for SDGs" vision advocated by Keidanren. Another urgent task, meanwhile, is to urge rebuilding of a free and open international economic order, given that transformation of the postwar international order has now given rise to protectionism, and Japan's environment in terms of national security is changing dramatically.

Keidanren aims to bring about "Society 5.0 for SDGs" by expediting five action targets set out in the new growth strategy: new growth through DX, transformation of work styles, regional revitalization, rebuilding the international economic order, and realization of green growth. At the same time, we will call for measures targeting fiscal consolidation in order to provide for emergencies and meet the need for appropriate resource allocation that enables sustainable growth. We will also strive to promote dialogue with business community members, both in Japan and in other countries including the US, China, and the nations of Europe, and Asia. In this way, Keidanren will contribute from the business community's standpoint to help Japan exercise leadership in bolstering international coordination and collaboration.

1. Balancing Prevention of COVID-19 Infection with Economic Activities

Keidanren will continue to do all in our power to bring COVID-19 infections under control. Given that life with COVID-19 can be expected to continue for a prolonged period, the public and private sectors will work in unison to implement measures aimed at minimizing the pandemic's effects on the economy. At the same time, capacity to deliver medical care will be bolstered by, for instance, enforcing measures to prevent infection and implementing strategies to effectively and efficiently ensure the availability of hospital beds. Setting our sights on a prompt return to normality followed by economic recovery, Keidanren will promote expansion of testing capacity, as well as provision of logistical capability and encouragement of vaccination among the public to ensure vaccines are administered promptly. We will also support informationgathering and use of analysis infrastructure to rapidly monitor the extent of infections and implement antiinfection measures, and seek resumption of international economic activities through relaxation of restrictions on entering and leaving Japan, certification of negative test results, digitalization of personal vaccination records, and international collaboration. In addition, Keidanren will amend its Guidelines for Preventing the Spread of Novel Coronavirus Disease (COVID-19) as needed, based on scientific findings.

2. New Growth through DX

As DX transforms the structure of industries worldwide, attention is increasingly focused on the importance of pursuing digitalization as a means to combat COVID-19. Keidanren will continue to accelerate DX employing HealthTech#1 and EdTech#2 in order to improve well-being.#3 We will promote thorough regulatory reform, digitalization, and data-sharing across every sector of Japanese society, including public administration, finance, and industry to create a resilient economy and society. EdTech will be employed from elementary and secondary education up to university to drive forward educational reforms that enable a diverse range of people to learn in new ways, regardless of their location or environment. Meanwhile, Keidanren will build up and accelerate its multi-company co-creation project that aims to realize value for consumers (the Keidanren DX Implementation Projects), targeting a society in which consumers genuinely feel that their lives are easier as a result of DX. In other measures, we will work to: create an environment to encourage utilization of data, including through participation in the Japanese government's deliberations on a data strategy; strengthen cyber security; promote full use of the My Number system and popularization of My Number cards; make digital government a reality; encourage utilization of AI (artificial intelligence); and promote the start-ups that create and sustain new growth industries. Keidanren will also support real-world implementation of smart cities that serve as models for Society 5.0.

3. Transformation of Work Styles

Keidanren will aim to establish diverse, flexible work styles that emphasize workers' autonomy in order to improve worker engagement and labor productivity, with a view to updating the Japanese employment system. Specifically, we will turn diversity into a business strength by promoting work styles unconstrained by time or place that allow a diverse range of people to play more active roles, including women, young people, senior citizens, people with disabilities, foreign nationals, and members of the LGBT community. Meanwhile, Keidanren will seek to further encourage side-jobs and concurrent employment, alongside fostering momentum toward an early increase in the types of work eligible for the planning-type discretionary labor system and other amendments to working hours legislation. Anticipating the post-COVID-19 era, we will examine measures for promoting the smooth flow of labor into growth industries. In addition, Keidanren will support the expansion of recurrent education by, for instance, assisting in the planning of recurrent education programs offered by universities and other institutions. Given that responding to the COVID-19 crisis has depleted financial resources available for supporting stable employment, Keidanren will also urge the government to refinance its employment insurance system at the earliest opportunity by injecting funds from general revenue sources.

4. Regional Revitalization

Targeting a society that can leverage the strengths of areas outside major cities to continue generating value, Keidanren will use DX as a tool to strengthen collaboration with local business organizations and governments, universities, and other players fulfilling key roles in communities nationwide. Amid continued population decline across Japan as a whole, wider adoption of new work styles that have become familiar during the COVID-19 crisis, such as teleworking, will boost regional revitalization. Keidanren will investigate the best system of public administration to facilitate collaboration among local governments across geographically widespread areas in order to generate flows of people into less urbanized localities as a means of rectifying the excessive concentration of people in major cities and enhancing the resilience of local economies and societies. Furthermore, Keidanren will investigate measures targeting structural reforms in industry and lobby the government to undertake reforms aimed at turning the agricultural industry—the main driver of local economies—into a growth industry capable of exporting, and creating a sustainable tourism industry, in addition to reinforcing the competitive advantages of manufacturing industries.

5. Rebuilding the International Economic Order

In preparing for the post-COVID-19 era, rebuilding a free and open international economic order is imperative, while close collaboration and coordination on global issues among countries and territories are crucial. Keidanren will pursue collaboration and dialogue with governments and business associations in various countries, including the US and China, and the nations of Europe and Asia. In conjunction with this, we will invest energy in further developing our private-sector diplomacy by proactively participating in forums such as the B7 and the B20. Meanwhile, Keidanren will actively involve itself in drawing up a range of international rules, including those relating to WTO (World Trade Organization) reforms and materialization of the DFFT.#4 Aiming to strike a balance between national security and global business activities, we will cooperate with the Japanese government through dialogue to further discuss measures to ensure economic security, including the development of advanced technologies and reinforcement of the infrastructure for their implementation, and taking rigorous steps to prevent the leakage of critical technologies.

6. Realization of Green Growth

Keidanren will try to create a virtuous cycle between the economy and the environment ("green growth") as an overall national strategy focused on measures to combat the pressing issue of climate change. Keidanren will work with unwavering resolve in unison with the government to achieve carbon neutrality by 2050, endeavoring to help others inside and outside Japan understand and trust Japan's initiatives as it does so. In addition to accelerating global initiatives including those involving other Asian countries, we will drive our Challenge Zero#5 initiative forward, expediting unprecedented innovations that will radically reform our economy and society, such as overhauling of industrial production processes and widespread dissemination of products and services that contribute to decarbonization. Keidanren will strive to establish cheap, reliable supplies of decarbonized energy, and with regard to electricity in particular, we will take steps to create the right environment for investment, develop next-generation electricity grids, expand renewable energy into a major power source, and ensure the continued use of nuclear power. To create a sustainable society and generate new growth opportunities, Keidanren will take a comprehensive approach to pursuing measures relating to issues such as establishment of a circular economy, biodiversity, and environmental risk management.

In order to achieve these aims, it will be essential for Keidanren to create an environment that helps to stimulate private-sector investment and productivity improvements, as well as provide support for policies tackling issues of national strategy that promote structural reform of the economy. Keidanren will coordinate the opinions of the business community regarding challenges facing companies and call on the government to devise the necessary policies. These challenges include reforms to create a social security system oriented to all generations, as well as amendment of the Japanese tax system to help revitalize business activity, and revision of international taxation rules in accordance with agreements between individual nations to keep pace with the increase in digital economic activities.

Other challenges include creation of more resilient supply chains in Japan and overseas, including those of SMEs; ensuring appropriate transactions; fostering the momentum of the Japanese government's global financial city initiative; implementation of university reform; deliberation on corporate governance and the form that competition-related policy should take in a digital economy, and promotion of diversity and inclusion.

  1. A newly coined word combining the words "Health" and "Technology." Describes the idea of utilizing digital technologies and data to solve a variety of issues, primarily in the fields of medical and nursing care, disease prevention, and health management.
  2. A newly coined word combining the words "Education" and "Technology." A means of utilizing digital technologies for digital transformation of learning.
  3. Enjoying favorable circumstances physically, mentally, and socially.
  4. Data Free Flow with Trust
  5. A new initiative whereby Keidanren collaborates with the Japanese government to aggressively publicize and encourage innovations targeting a decarbonized society undertaken by Japanese companies and organizations, in Japan and overseas. As of April 2021, 183 companies and organizations had participated in the initiative, and 385 examples of innovations had been publicized.

Comprehensive Strategy