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

April 25, 2016

Monetary Policy

The negative interest rate adopted by the Bank of Japan has both positive and negative effects. The objective of the negative interest rate is to lower the lending rate to encourage capital investment and research and development by companies, as well as home purchases by the people, and thereby, spur consumption. Because it takes time for the positive effects to manifest themselves, the policy has to be assessed not by discussing the individual effects and impacts, but by evaluating it comprehensively from a long-term perspective. There is no doubt that the policy will stimulate capital investment and home purchases, and it will have a positive effect on the Japanese economy finally.

Equal Pay for Equal Work

The business community and the government share the same vision to realize equal pay for equal work with an eye to eliminating irrational wage disparities between permanent and non-regular workers. However, wage systems and employment practices vary from country to country, and the government must take Japan's unique systems into consideration when it introduces equal pay for equal work. In particular, wages are determined not based on job responsibilities alone, but also by taking into account dimensions such as expectations pinned on workers, their roles to be played, and their future contributions to companies. A system that straightforwardly sets out to pay the same wage for the same work does not suit the situation in Japan, and could lead to the loss of Japanese companies' strength in their capitalization of human resources.

At this stage we should be spending sufficient time to discuss the desirable system of equal pay for equal work, being mindful of these factors. Also studies are under way to determine what percentage of the salary of permanent workers is suitable for the salary of non-regular workers in order to improve their employment condition. This is another matter for which some time needs to be spent discussing, taking into account the employment practices and systems of Japan.

Consumption Tax Increase

Keidanren considers that the consumption tax rate should be raised to 10% as scheduled, from the standpoint of stabilizing and improving social security and restoring sound public finances. To prepare an economic environment that can tolerate the second increase (8% to 10%), in the short-term measures are needed to shore up consumption, and in the medium- to long-term the Japanese economy must pursue a self-sustaining growth path.

Meanwhile, the Kumamoto Earthquake recently struck Japan. Prime Minister Abe stated previously that he would raise the consumption tax rate as scheduled, as long as the situation is not of the same scale as the global financial crisis and the Great East Japan Earthquake. Studies are ongoing to find out the level of damage from the Kumamoto Earthquake. The business community's view remains unchanged even now after the earthquake, that the consumption tax rate should be raised as planned. I expect that the decision would be based on a comprehensive assessment of the various factors, including the economic losses from the Kumamoto Earthquake.

As regards the proposal to raise the rate by 1% at a time, some suggest that this would complicate administrative procedures and that this would be difficult to apply, especially in small and medium-sized businesses.

Tokyo Olympic and Paralympic Games

Today, the official emblems were decided. They reflect the elements of freshness and honesty valued in Japan and have designs characteristic of the Edo Period. The emblems were selected through a highly transparent and rigorous process based on the lessons from the withdrawal of the emblems last summer, and this can be commended. Information was communicated proactively during the selection process. It drew the attention of many people. I welcome the fact that the emblems were decided in a manner that is convincing to the people. While there have been a series of unexpected events including the issue of the emblems and the issue of the New National Stadium, I expect that the decision of the emblems will give momentum to and move forward the preparations for the Tokyo Olympic and Paralympic Games.

Constitutional Revision

The Constitution is the supreme law of the nation, and we need to accord full weight to this. This is not to say I believe the Constitution should not be revised based on the changes in the times. If we look outside of Japan, many countries including France and Germany have revised their constitutions numerous times.

As any revision would have significant implications to how the nation functions, no revision can be made without thorough discussions among people in all fields and levels. Prime Minister Abe himself has stated that lively discussions should take place among the Japanese people, and I perceive that discussions among the public must come first. Constitution Day on May 3 provides an appropriate opportunity for the society as a whole to think about the significance of the Constitution and what it should look like today.

While the discussions on the Constitution are important, Keidanren has not held in-depth debates on the Constitution since 2005. The reason is that Japan has faced a severe economic situation with deflation persisting for two decades, and I have thus made ending deflation and revitalizing the economy my top priorities since becoming Chairman of Keidanren.

Mitsubishi Motors Corporation's Improper Conduct
in Fuel Consumption Testing

It is very regrettable that a scandal has occurred involving a leading company of Japan. Mitsubishi Motors Corporation (MMC) should swiftly investigate the causes of the improper conduct, take measures to prevent its recurrence, and compensate consumers. All companies need to give priority to complying with laws and ordinances in all aspects of their business. I urge MMC to give serious reflection to the fact that it has had compliance problems twice over the last decade or so. MMC President Aikawa asked to resign from his position in Keidanren, and his request was approved. Keidanren will continue to carry out outreach efforts to ensure that member companies comply with the Charter of Corporate Behavior of Keidanren.

Executives' Comments