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Executives' Comments  Press Conferences Chairman Sakakibara's Statements and Comments
at His Press Conference

March 7, 2016

Appointment of new vice chairs of Board of Councillors

At a meeting of the chairman and vice chairs today, we informally decided on candidates for vice chairs of the Board of Councillors to be newly selected. We will propose and authorize their appointment at an annual General Assembly meeting of Keidanren on June 2 after endorsing it at a Board of Directors meeting on May 9. Effective with the General Assembly meeting, Board of Councillors Vice Chair Shinichiro Ito will retire upon completion of his term while four other vice chairs -- Tsuyoshi Okamoto, Ken Kobayashi, Kunio Ishizuka and Takeshi Kunibe -- will step down due to their assumption of the posts of vice chairs of Keidanren.

As candidates for new vice chairs replacing the retiring officers, we named Hakuichi Inc. Chairwoman Kuniko Asano, Tokio Marine & Nichido Fire Insurance Co. Chairman Shuzo Sumi, Asahi Group Holdings Ltd. President Naoki Izumiya, Panasonic Corp. Chairman Shusaku Nagae, Sumitomo Corp. President Kuniharu Nakamura and Mizuho Financial Group Inc. President Yasuhiro Sato. Besides these six officers, vice chairs appointed in 2014 and to be named to another term will be candidates subject to General Assembly approval. The Board of Councillors will thus comprise 21 members led by Chairman Hiromichi Iwasa on June 2 and thereafter.

Hakuichi is a major manufacturer of leaf gold, a traditional industry in the Kanazawa city area. The company is engaged in a variety of business operations such as handicraft, architectural ornaments, edible gold leaf and cosmetics. Chairwoman Asano is a founding manager of the company. The Board will now have two women vice chairs along with Vice Chair Haruno Yoshida who assumed the post last year. We hope Ms. Asano will bring fresh air into Keidanren as an energetic female business manager and as a player in the vitalization of regional industries and the promotion of small and medium-sized companies.

Post-disaster restoration from the Great East Japan Earthquake

As we are set to greet the fifth anniversary of the Great East Japan Earthquake, the reconstruction of living bases and the recovery and restoration of public infrastructure in the regions affected by the 2011 disaster are coming into sight. On the other hand, more than 170,000 people are being forced to lead inconvenient lives as evacuees. As for industrial reconstruction, persistent harmful rumors have stalled the recovery of the agriculture, fisheries, forestry and tourism industries. Keidanren has made various proposals in this connection and conducted activities to help dissipate harmful rumors and prevent memories of the disaster from fading away among the general public. In October 2014, we hosted the Disaster Area Support Market event to help encourage the consumption of products from the affected parts of Japan. We are also calling on member companies of Keidanren to use food ingredients from the affected areas at their cafeterias for employees. Although we are making these efforts, there are many challenges to be addressed and we are still halfway down the road to regional economic restoration.

In the morning today, we hosted an event to support reconstruction in cooperation with the Reconstruction Agency and the JA Group of agricultural cooperatives. Titled "Generate a new flow of commerce in Tohoku -- a challenge for growth," the event was intended to create a new commercial flow in the Tohoku region and boost newly burgeoning business opportunities up to the stage of growth. It was a very meaningful event in which Keidanren member companies and firms from the affected areas explored solutions to problems faced by regional businesses.

Keidanren will continue efforts to assist the Tohoku region, focusing on industrial reconstruction, measures to cover damage from harmful rumors and prevention of disaster memories from fading away, in addition to the current activities for support such as the dispatch of people from member companies to affected municipalities and the Reconstruction Agency.

Spring labor-management wage talks

As shown in this year's report by the Committee on Management and Labor Policy, we are seizing various opportunities, and urging member companies enjoying better earnings to positively tackle the issue of wage increases in excess of the previous year's results on an annual income basis. We expect them to respond to our request in a fashion matching the situation of individual companies through wage scale hikes, regular pay raises, and greater allowance and bonus payments, among other measures. The committee report also suggests another way of response, including the employment of non-regular workers as permanent staff and better treatment in pay and other aspects. We hope member companies will make efforts in that direction.

Some media reports say labor unions of some financial institutions have abandoned demands for pay scale hikes, but I would like to refrain from commenting on individual cases. On the other hand, some unions are reportedly poised to demand increased lump-sum allowance payments compared with last year. We expect to see wage increases on an annual income basis. We are hoping for higher wage levels as a whole.

Consumption tax hike

Keidanren considers that another increase in the consumption tax rate scheduled for April next year should be implemented as planned from the perspective of improving social security and restoring sound public finance. But a look at the current economic situation shows that consumer spending is mired in a slump resulting from a reactionary decline following a last-minute rise in demand caused by the previous consumption tax hike from 5% to 8%, hovering around 300 trillion yen level a year. It is necessary to improve the current economic environment to an extent permitting the consumption tax hike to 10% in April next year as scheduled. Namely, the Japanese economy must have fundamental power strong enough to tolerate another tax increase. Prime Minister Shinzo Abe has reiterated the government's intention to raise the tax as planned. We hope the government will go ahead that way.

In order to change the consumer spending trend and put it on an upward course, it is necessary to address it in the short and medium-to-long term. In the short term, from the viewpoint of causing an immediate effect in particular, it is important for companies to raise wages in a proper manner. Also, it is required to take consumption-stimulating measures coinciding with wage hikes.

Equal pay for equal work

Keidanren agrees to Prime Minister Abe's basic idea of seeking to realize equal pay for equal work with an eye to eliminating irrational wage disparities between permanent and non-regular workers. What sort of system should be adopted in reality has yet to be discussed, and Keidanren will propose its own ideas in an adequate manner. Wage systems and employment practices are different from country to country, and Japan has its own wage system and employment practices. It is necessary to put in place a system based on these factors. The matter is not so simple as to say we may pay the same wage for the same job. In Japan, we have a wage system taking into account various elements such as expectations pinned on workers, their roles to be played and their future contributions to companies. If the envisaged system is not based on this point in a proper fashion, it could lead to a loss of the strength of Japanese companies in their utilization of human resources.

Japan-China relations

China started an annual session of the National People's Congress on March 5, and debate is under way on various issues, including the 13th Five-Year Plan. When we conferred with Premier Li Keqiang in Beijing last November, we were told that China will promote structural reforms of state-run enterprises such as steel, coal, building materials and chemicals by resolving excessive equipment and facilities and taking other measures under the new five-year plan, thus further developing its policy of reform and opening-up. The 13th plan calls for an average annual economic growth rate of 6.5% or more toward realizing a "well-off society." Although the growth goal is lower than the 7% targeted in the past, the pursuit of 6.5% growth when the country's gross domestic product (GDP) is expanding as a whole is a great goal and it is essential to realize it with sureness. We hear that China will aim at 1,620 trillion yen in GDP in 2020, around triple the Japanese GDP target of 600 trillion yen for the same year. It is important to materialize it not just for the Chinese economy but for the world economy as a whole. We hope that China will deepen the reform and opening policy as planned.

We have the strong impression that China has hammered out a policy focused on innovation under the 13th Five-Year Plan. For example, the plan calls for spending on research and development to be raised from 2.1% to 2.5% as a proportion to GDP. Japan's R&D ratio is still at 0.8%. If China attains the targeted increase, it will mean enormous R&D expenses, possibly allowing the country to grab a leading role in the field of innovation. China has mapped out specific policies for the purpose, including state-level projects and creation of globally top-rate universities. We are keeping watch on these innovation policies.

Executives' Comments