Policy Proposals  Comprehensive Strategy   Achieve a Virtuous Cycle of Growth and Distribution Keidanren Policy for Fiscal 2023

May 31, 2022

Countermeasures against the COVID-19 pandemic are coming to an end after more than three years, and the curtain has risen on a new, post-pandemic era. This new milestone marks the ideal moment to tackle head-on the problems that face the whole world, including the increasingly serious problem of climate change and the urgent need to correct inequalities, and to achieve a virtuous cycle of growth and distribution. By doing so, Keidanren is determined to restore dynamism to the Japanese economy and boost Japan's presence on the world stage.

To achieve growth, Keidanren aims to create new value and demand through unceasing innovation. To that end, it will encourage investment in Japan through public-private collaboration, in priority areas including green transformation (GX), digital transformation (DX), and startups, will work to enhance the ability of Japanese companies to create added value, and will endeavor to further strengthen Japan's industrial competitiveness. Keidanren will also take bold measures to tackle labor market reforms to encourage smooth labor mobility, with the aim of boosting the renewal and productivity of Japanese industries.

Additionally, Keidanren will work on investment in people, including structural wage increases, and by ensuring that the fruits of growth are appropriately distributed, contribute to the creation of an ample middle class. What is aimed for is to create a society where many people feel a genuine sense of economic prosperity, where diverse well-being is a reality, and where people can pursue their wishes and dreams and turn them into a reality.

Turning our gaze beyond Japan, the world economy is on the verge of fragmentation in an increasingly challenging international climate, symbolized most strikingly in Russia's prolonged aggression against Ukraine. To ensure that companies can continue to engage proactively in their global business activities in this difficult climate, as the business organization of the host nation for the G7 Summit this year, Keidanren will continue to advocate the maintenance and strengthening of a free and open international economic order.

Keidanren has set the measures listed below as its priority initiatives for fiscal 2023, and will continue to strive for the achievement of a Society 5.0 for SDGs#1 through the practice of sustainable capitalism positioned from the social point of view.

1. Achieve Growth through Science, Technology, and Innovation

(1) Green transformation (GX)

  • To achieve carbon neutrality by 2050, consistently promote GX in ways that will increase public and private investment to the maximum possible extent and will lead to maintaining and strengthening industrial competitiveness and to sustainable economic growth.
  • Promote the development and social implementation of innovative technology as the government carries out its commitment to medium- and long-term fiscal spending and enhances transition finance. At the same time, with regard to the government's growth-oriented carbon pricing concept,#2 participate proactively in debates and other activities related to the further development of the GX League#3 to ensure appropriate institutional design. In addition, advance transition in Asia through collaboration and cooperation with countries in the region, and promote measures to address climate change on a global scale. Work also to stimulate green demand and strengthen supply chains overseas.
  • While working to strengthen energy security, use GX to construct a system that will support an affordable and stable energy supply. In particular, urge progress on a national strategy that will aim at making renewable energy the "major power source", at maximizing the use of nuclear power plants whose safety has been confirmed, at taking measures to deal with the back-end issues of nuclear fuel cycle, at materializing the plan to develop and construct advanced reactors and creating the business and investment environment necessary for them, and at moving toward the practical use of nuclear fusion technology.
  • Advance a circular economy and nature-positive policies (conservation of nature and biodiversity) in an integrated manner with GX to realize a sustainable economy and society, and use this to strengthen industrial competitiveness and achieve economic growth.

(2) Digital transformation (DX)

  • Push for digital and regulatory reforms through the Digital Extraordinary Administrative Advisory Committee, to achieve a truly complete and comprehensive switch to digital in line with the government's five digital principles.#4
  • Encourage the wider use and improved convenience of the My Number card, and push to ensure that people can complete administrative procedures in a one-stop, once-only fashion.
  • Identify and work to solve issues with inter-company data linkage, from the perspective of realizing Society 5.0 for SDGs.
  • Help to compile and disseminate case studies for web 3#5 and related fields.
  • Encourage the government to put in place legal and other frameworks for DX, primarily in the fields of healthcare and education, while having the business community actively use data to co-create value for consumers.
  • Work to strengthen the sharing of information on disasters and disaster preparedness, and to enhance cybersecurity, throughout supply chains including those of small and medium enterprises (SMEs) on the basis of close public-private collaboration.

(3) Promoting startups

  • Encourage changes of behavior by major companies and work to solve issues, in order to achieve the goal laid out in the Keidanren proposal "Vision for Startup Breakthrough"#6 of a tenfold increase within five years in numbers of startups and successful startup companies, and thereby to enhance the startup ecosystem.
  • Encourage open innovation between startups and large companies, including in the regions and overseas.

(4) Strengthening competitiveness in new growth areas

  • To demonstrate soft power, work to stimulate entertainment content and other creative industries. Urge the early implementation of concrete policies for human resources development, overseas penetration, construction of production centers, and so forth with a view to the sustainable expansion of the presence of Japanese creative content around the world.
  • To realize the world's most advanced bioeconomy society, join hands with the government, universities, related industries, experts, and other stakeholders to implement the five strategies outlined in the Keidanren proposal "Biotechnological Transformation (BX) Strategy."#7 Also proactively publicize in Japan and overseas the work being done in biotechnology fields in Japan.
  • Engage in cross-industry debates on the challenges faced by mobility and the vision for the future of the industry, and lobby for policies to strengthen the international competitiveness of the mobility industry.
  • Further enhance industry-academia-government collaboration to build an ecosystem for innovation, while strengthening the intellectual property strategy including moves toward international standardization with an eye to global rollouts.
  • Promote research, development, and implementation of semiconductor, artificial intelligence, quantum, biotechnology, and other technologies that are highly important from the perspective of Japan's international competitiveness. With regard to deep tech#8 whose development requires substantial investments of time, in particular, urge maintained momentum for ongoing fiscal support.
  • Build an environment that will attract impact investing,#9 supportive consumption,#10 and other types of funding to businesses that contribute to solving social issues.

2. Create an Ample Middle Class

(1) Putting an environment in place for structural wage increases

  • Work to maintain and strengthen momentum for wage increases by distributing, as investment in people, the fruits of growth achieved through co-creation of value with workers, and link this to the achievement of structural wage increases.
  • In order to bring about smooth labor mobility to growth industries and fields essential to the improved productivity of Japan as a whole, push the government to strengthen employment matching functions, to shift to a safety net that facilitates labor mobility, and to enact legislation on working hours that is conducive to side-jobs and concurrent employment. At the same time, urge the introduction and reinforcement of measures to assist workers with self-directed career formation, capacity building, and skill development.
  • Urge individual corporations to establish employment systems that match companies' situations, especially by diversifying hiring processes including adopting year-round hiring and by considering the introduction and utilization of job-based employment.
  • In order to create momentum for wage increases throughout the country including in medium-sized companies and SMEs, work to increase the number of companies participating in, and improve the effectiveness of, the Declaration of Partnership Building,#11 and achieve appropriate sharing of price rises throughout the supply chain.

(2) Promoting DE&I, diverse work styles, and educational reforms

  • In order to allow every worker to utilize their individuality and strengths to the greatest possible extent, accelerate measures aimed at ensuring diversity, equity, and inclusion (DE&I) from the perspective of respecting not only human rights but also equality and fairness, and promote active participation of diverse human resources—including women, foreign nationals, young people, the elderly, people with disabilities, and fixed-term contract workers—to drive further innovation.
  • As well as encouraging flexible work styles that help improve worker engagement and productivity, advocate further revision of working hour systems. To improve compensation packages for fixed-term and other contract workers, campaign for appropriate measures to ensure equal pay for equal work, and urge companies to have fixed-term and other contract workers with motivation and skills transition to regular employees.
  • Aiming to establish a virtuous cycle of work and study, redouble efforts to advance reforms of the educational system, which include the enhancement of recurrent education and reskilling, support for career formation from people's student years, and reforms that encourage greater contributions from human resources with doctoral degrees and women from a science and engineering background, in collaboration with universities and other educational institutions. As part of these efforts, call on the government and other entities for educational reforms at primary and secondary level, to achieve a model of education that fosters diversity.

(3) Building a social security system for all generations and addressing policies for children's issues and childcare

  • With the aim of building a social security system oriented to all generations that underpins the creation of an ample middle class, take steps to achieve reform of systems to increase safety, peace of mind, and sustainability for all citizens, in particular by curbing any increases in insurance premiums imposed on the working-age population, and raising the efficiency of healthcare and caregiving systems. Also, deepen the debate on structural issues, including the state of social security premiums and the taxation systems.
  • In response to the government debate on strengthening policies for children and childcare, publicize Keidanren's basic thinking, in particular to share a sense of urgency about the declining population and emphasize priority policies. In parallel, accelerate companies' efforts to encourage more male workers to contribute to housework and childcare, including messages from senior management and measures that help employees balance work and home life. With regard to the financial resources that will be necessary to enhance benefits for childcare, work to ensure that society as a whole bears the burden by combining various sources of funding in ways that do not impede momentum for the creation of an ample middle class and wage increases.

3. Build Attractive Regional Communities and Economies

(1) Establishing sustainable regional economies

  • Utilize Keidanren's Regional Co-creation Action Program#12 to join forces with the national government, local governments, universities, sports bodies, cultural organizations, and other stakeholders, and work to build attractive regional communities based on diverse co-creation in collaboration with the government's Vision for a Digital Garden City Nation.
  • While keeping a close eye on the progress of the government's Basic Guidelines for Reconstruction in Response to the Great East Japan Earthquake from the Second Reconstruction and Revitalization Period,#13 continue to work on activities aimed toward recovery and regeneration of disaster-affected areas in the Tohoku region.
  • Consider and implement policies for sustainable growth of the tourism industry, including securing of human resources for the industry and in tourist areas to meet a strong recovery in travel demand with a view to the reopening of inbound tourism, as well as policies to turn agriculture into an export-oriented growth industry that contributes to food security. Cohost networking events and hold thematic discussions with regional business associations to revitalize local economies, while ascertaining the actual conditions and needs of regional communities to reflect them in Keidanren activities.

(2) Considering a vision for the future of regional economies and administration in view of the nation's falling population, declining birthrate, and aging society

  • Conduct discussions on the vision for the future of the nation and regions, on the assumption of a declining birthrate and aging society.
  • Consider how to distribute administrative systems and society functions between the national government and the regions, from the perspective of boosting the sustainability and resilience of the nation as a whole.

4. Reform the Fiscal and Taxation Systems to Support Strong Economic Growth

  • Work toward the restoration of fiscal health, in line with the direction of dynamic economic and fiscal management through public-private collaboration that aims to achieve sustainable economic growth and fiscal equilibrium in the medium to long term.
  • Urge realization of the domestic taxation reforms that will help revitalize corporate activities, while paying attention to development of a new corporate surtax as a source of funding to reinforce the country's defense capabilities. Respond also to revisions of international taxation rules based on agreement between countries in line with the digitalization of the economic activities, and to domestic implementation of these rules.

5. Rebuild a Free and Open International Economic Order

(1) Advocate to maintain and strengthen a rules-based international economic order

  • Prevent division of the global economy by launching the "Free and Fair Trade and Investment Club" proposed by the B7 in the lead-up to the G7 Hiroshima Summit, by deepening and expanding economic partnership agreements and similar arrangements, by enhancing official development assistance, and by reforming the World Trade Organization on rule formulation, supervision, and implementation, consequently rebuilding a free and open international order. At the same time, when posing regulation on trade and investment for national security reasons, call on governments to limit its scope to the minimum.
  • Urge the Japanese government to fully reflect the opinions of companies, actual business activities, and other factors in Cabinet and ministerial orders to be issued to implement the Economic Security Promotion Act, and to conduct continuous review of the regulations to reduce the burden placed on the companies subject to the regulations.
  • Aim to strengthen cybersecurity and to encourage joint research with other countries, participate proactively in the discussion to develop legislation for security clearance system on economic security and thereby help establish an effective information security system in Japan that is trustworthy by other countries.
  • Promote business managements that respects human rights, starting with conducting human rights due diligence. Also, seek actions by the government to ensure that companies are not placed at a disadvantage even if they suspend particular business transactions as a result of such due diligence.

(2) Engaging private-sector economic diplomacy actively

  • Follow the discussion at the G20 Summit in India through participating the B20 summit and other efforts, to encourage understanding of the joint recommendation proposed at the B7 Tokyo Summit.#14
  • Through conducting private-sector economic diplomacy including dispatch of missions and holding joint economic conferences, strengthen relations not only with the Western countries but also with other countries around the world, thereby contributing to the solution of global-scale issues, and help other nations to solve social problems and advance growth strategies.

6. Contribute to the Success of Expo 2025 Osaka, Kansai, Japan, etc.

  • Based on the recognition that Expo 2025 Osaka, Kansai, Japan, will contribute to the achievement of Society 5.0 for SDGs and the sustainable growth of the Japanese economy and society, cooperate with all aspects of preparations for the success of the Expo while deepening collaboration with the Japan Association for the 2025 World Exposition, the national government, local governments and business community, and other stakeholders.
  • Cooperate with preparations for GREEN×EXPO 2027 (World Horticultural Exposition) that will be held in Yokohama, Kanagawa Prefecture, in 2027, while deepening ties with the national and local governments, the business community, and other entities.

  1. By combining the digital revolution with human ingenuity, Society 5.0 aims to achieve not only economic growth but also the solution of social issues and coexistence with nature. Since it can also contribute to the achievement of the Sustainable Development Goals (SDGs) laid out by the United Nations, the Keidanren proposal "Society 5.0: Co-creating the future" (November 2018) positioned "Society 5.0 for SDGs" as a concrete vision for the future society it should aim for.
  2. Support for ambitious upfront investment using GX economic transition bonds, GX upfront investment incentives through carbon pricing (introduction of a further developed emissions trading system, and introduction of carbon levies), etc.
  3. A government framework in which companies with ambitious carbon reduction targets voluntarily trade emissions to meet their targets while investing in emissions reductions.
  4. (1) Full digital/automation principle, (2) agile governance principle, (3) public-private partnership principle, (4) ensuring interoperability principle, and (5) common infrastructure usage principle.
  5. A version of the internet that incorporates blockchain technology, referred sometimes to as "Web 3.0," etc.
  6. Published March 15, 2022, https://www.keidanren.or.jp/en/policy/2022/024.html.
  7. Published March 14, 2023, https://www.keidanren.or.jp/en/policy/2023/015.html.
  8. Technologies developed at high cost over many years at universities or research institutions based on scientific discoveries or cutting-edge technology, with the potential to dramatically transform lifestyles or contribute to the solution of social issues around the world (e.g., artificial intelligence technology, quantum technology, and biotechnology).
  9. Investment that aims not only to gain economic benefits but also to resolve social issues.
  10. Consumption that supports producers and companies engaged in activities that have a positive impact on society, including support for disaster-affected areas.
  11. An undertaking by companies, both large and small, to declare their trading policies from the perspective of contractees. Companies declare in the name of a representative that they will work for coexistence, coprosperity, fairer trade practices, and other improvements throughout the supply chain. As of March 31, 2023, approximately 550 Keidanren member companies have declared their policies.
  12. Published November 16, 2021, https://www.keidanren.or.jp/policy/2021/105.html
    (in Japanese).
  13. Approved by the Cabinet on March 9, 2021.
  14. Held at Keidanren Kaikan in Tokyo on April 19-20, 2023.