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

October 4, 2021

1. Current Conditions of and Outlook for the Japanese Economy

Due to ongoing measures to prevent the spread of COVID-19 infections, the Japanese economy remains in a severe situation, especially in the face-to-face service sector. Although the upswing in exports, production, and capital expenditure continues as domestic production activity picks up and overseas economies rebound, a close watch needs to be maintained on the impact of the spread of infections overseas and supply constraints due to shortages of components such as semiconductors.

Looking ahead, economies are projected to rally due to progress in vaccination programs in many countries. The pace of recovery will depend on overseas economic trends, the spread of COVID-19, including new variants, in Japan and abroad, and the maintenance of healthcare systems.

Steps required to revitalize economic and social activity while living with COVID-19 need to be taken quickly. As well as accelerating the vaccine rollout and developing therapeutic drugs, such measures include maintaining the healthcare provision system to enable prompt treatment of infected persons, expanding testing by easing regulations for simple antigen test kits, appropriately easing immigration restrictions, and bringing vaccination passports into effect.

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 urge the government to consider these agendas in the Digital Agency launched on September 1.

4. Promotion of Energy and Environmental Policy for Green Transformation

With the aim of achieving carbon neutrality by 2050, we will create a virtuous economic and environmental cycle (green growth) and realize green transformation (GX). For its part, Keidanren will pursue proactive initiatives such as the Keidanren Carbon Neutrality Action Plan and Challenge Zero, as well as promoting climate change policies through collaboration between the government and the private sector and cooperation on an international scale. We will strive to build advanced and resilient energy systems that enable stable and affordable provision of decarbonized energy. We will work towards decarbonizing power sources by making renewables into Japan's main sources of power and achieving maximum use of nuclear power plants once safety has been assured, creating an environment conducive to investment in electric power, and introducing next-generation power transmission and distribution networks.

In the Circular Economy Partnership established by Keidanren, the Ministry of the Environment, and the Ministry of Economy, Trade and Industry, we will strategically communicate leading examples of Japanese companies' efforts to create a circular economy. Through dialogue between the public and private sectors, both sides will collaborate in their efforts to create a circular economy.

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. Although utilization of schemes such as the employment adjustment subsidy has helped to prevent loss of employment, it has also resulted in financial pressure on the employment insurance system. In the short term, we call upon the government to inject funds from general revenue sources to secure funding for the employment adjustment subsidy. At the same time, to ensure the sustainability of the system, financial reconstruction of the employment insurance system should be urgently examined, including the extent of the burden to be borne by the state.

We will also focus on improving employee engagement and promote the extension of work style reforms, as well as accelerating initiatives toward diversity and inclusion, which will be a source of innovation. 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 with rigorous measures to ensure health and wellbeing as a prerequisite.

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 and the UK-EU FTA. 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, we 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 now that the start of negotiations is imminent, and the reinstatement of the US. Additionally, based on our proposal "Towards the 12th WTO Ministerial Conference" announced in September 2021, we will urge the conference to strengthen the functions 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 create a legacy from the success of the Tokyo Olympics and Paralympics, and use the knowledge and experience gained for future events such as Expo 2025 Osaka, Kansai, leading to economic and social revitalization in Japan.

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