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

December 5, 2016

Spring Labor-Management Wage Dialogues

In the lead up to the publication of the Report of the Committee on Management and Labor Policy in January next year, the Vice Chairs and I held discussions on management's stance toward next year's Spring Labor-Management Wage Dialogues, considering Prime Minister Abe's requests for (1) wage rises by at least the same level as the previous year and pay scale increases for the fourth consecutive year; and (2) discussion that takes account of the expected inflation rate. We shared our directions regarding the position of management.

The momentum for wage rises needs to be continued in order to bring about a virtuous economic cycle. Pay scale increases are one option, and, similarly to 2016, it is important to improve overall terms and conditions, including the various allowances and work style reforms, with the aim of increasing wages in terms of annual incomes.

Revisions to wage scale are decided through dialogue between labor and management at each individual company, and specific standards will depend on the circumstances of each company, taking into account factors such as business results and productivity.

Social Security Reform

Review of the drug pricing system is an important aspect of social security reform. I am taking part in the Council on Economic and Fiscal Policy not as an interested representative of a specific industry, but from a neutral position. As such, I am engaged in a variety of reforms of social security programs, some of which will be quite drastic and painful for the populace. One of those is the proposed review of the drug pricing system. Unless Japan engages in radical reforms, it will not be able to guarantee the sustainability of the social security system itself. I am aware that a review of the drug pricing system will have a major impact on the pharmaceuticals industry, but we are also simultaneously discussing the improvement of research and development programs, with the aim of promoting innovation in the pharmaceuticals industry. It is important that we make progress on social security reform while also maintaining the international competitiveness of the pharmaceuticals industry.

Recruitment and Employment of New College Graduates

This year, the schedule for recruitment and employment of new college graduates was changed, with recruitment campaigns beginning in March and the selection process starting in June. Feedback from companies, universities, and students has been positive overall, with most parties agreeing that the schedule was better than last year. On the other hand, there were some opinions voiced that the recruitment campaign could have been a little longer and that changing the schedule every year was not desirable. Keeping these points in mind, we hope to come up with final directions for the new-graduate recruitment and employment schedule for 2018 and beyond in January next year.

Equal Pay for Equal Work

The government and the business community are united in their basic vision to realize equal pay for equal work. On the other hand, Japan has certain employment practices that have been established between labor and management, and these practices are the source of Japanese companies' international competitiveness. We have repeatedly stated the need to give due consideration to Japan's employment practices in the deliberation of equal pay for equal work. If the guidelines provided by the government were to place a burden on companies, it could lead to a loss of international competitiveness. In Japan's case, even if the nature of the work may be the same at a certain point in time, wages reflect dimensions such as expectations of future roles and contributions to the work of the company. What is important is not the same pay for the same work, but the realization of balanced terms and conditions for employees.

Tokyo Olympics and Paralympics Venues

The Tokyo Metropolitan Government, the national government, the Tokyo 2020 Organising Committee, and the International Olympic Committee (IOC), from their expert standpoints, are considering a review of the venues from the dual perspectives of athletes-first and economic feasibility. For the swimming, canoe-kayak, and rowing events, the venues will remain unchanged and a final conclusion was reached that was close to the original proposal, although some cost savings have been achieved. For the volleyball, two proposals — Ariake and Yokohama — are still being considered. It is important that a conclusion be reached after comparing the two proposals and weighing them up based on those dual perspectives.

Osaka World Expo

A committee of experts has been formed to consider Osaka's bid to host the World Expo, with Vice Chair Nobuyuki Koga participating from Keidanren. From the viewpoint of pursuing growth strategies, holding a World Expo in Osaka in 2025 after the Tokyo Olympics and Paralympics in 2020 and the Kansai World Masters Games in 2021 would serve to drive economic growth. If Osaka does hold a World Expo, not just the Kansai region, but the whole of Japan will need to become involved. My understanding is that, as the first step, namely, securing the success of the bid, deliberations will soon commence regarding what kind of structure, and the size of that structure, will be formed to pursue the bid as a national project.

Integrated Resorts Promotion Bill

Regarding the development of integrated resorts (IR), including casinos, the promotion of tourism and attraction of MICE events to Japan have been indicated as major policies within the Japan Revitalization Strategy. I understand that these aspects are very significant for the Japanese economy. On the other hand, on the topic of casinos, there is much concern and caution about gambling addiction and public safety among the populace. I would ask the government to avoid hasty debate of this issue and to deliberate it in a way that will gain the broad understanding of the Japanese public.

Results of Italian Referendum

A referendum was recently held in Italy to decide on an amendment of the Constitution, which was put forward by the Prime Minister, Matteo Renzi. The result was a win for the "no" vote, which exceeded the "yes" vote by a large margin. Upon hearing the outcome, Prime Minister Renzi announced that he would resign. Italy's problems have the potential to become a new factor of instability in the international community, and there is a possibility that a political vacuum could emerge for a period, so we must continue to monitor the situation carefully. On the economic front, there is concern about the problem of bad debts held by the Italian banks. All the more because Prime Minister Renzi was working to address this issue, we will be watching future developments closely to see how this problem will be concluded. We will also need to monitor the movements of new political parties such as the Five Star Movement.

There are approximately 140 Japanese companies in Italy, which have invested a total of 420 billion yen and created some 27,000 jobs in that country. Among all the EU countries, Japanese companies have a particularly large presence in Italy. Although the results of the referendum are not likely to have any major direct impact on the Japanese economy in the immediate term, we will need to watch carefully to see what kind of impact it has on the business activities of Japanese companies in Italy.

Japan-US Economic Relations

The transition team for the new US administration has gone into action. Regarding trade policy, President-elect Trump has declared that the US will withdraw from the TPP, and has also made statements about re-examining NAFTA. Both of these issues will impact on the Japanese economy. In particular, given that NAFTA is already in force and Japanese companies have established supply chains that take advantage of the agreement, its re-examination could have a major impact on those companies. It is essential that the Japanese business community stress its importance.

Keidanren has sent economic missions to the United States for the past two years and we hope to continue this again next year. Some 8,000 Japanese companies do business in the United States and have created 1.7 million jobs there. We will strive to secure the understanding of the new US administration of these major contributions that Japan's business community is making to the American economy.

Executives' Comments