- Nikkei Average
- Fiscal Consolidation
- Wage Increases
- Recruitment Activities
- Support for Ukraine
- Political Funding
- Osaka-Kansai Expo
Nikkei Average
(In response to a question about the fact that it took around 34 years for the Nikkei stock average to surpass its all-time high) Deflation is the cause. Amid prolonged deflation, Japanese companies persistently pursued management approaches striving to overcome the "three excesses" — excess production capacity, debt, and employment. As part of these efforts, they also actively expanded overseas, as is clearly demonstrated by the considerable increase that occurred in foreign direct investment. As a result, while listed companies succeeded in recording all-time highs in profits, on the other hand, investment and consumption within Japan failed to grow, and for a long time neither wages nor commodity prices rose. In other words, Japan's economy had fallen into a fallacy of composition. However, while driven by cost-push factors, a rise in commodity prices has now begun, and momentum has also developed toward wage increases. With investment and consumption on an upturn, the course of the Japanese economy is shifting significantly, toward a virtuous cycle of growth and distribution. Recognition of this shift has surely played a role in the increase in stock prices.
It must, however, also be noted that stock prices may also be influenced by the flow of capital in the short-term, and the current stock market rally may also be attributable to yen depreciation and capital inflows due to the economic slowdown in China. However, what is notable is the anticipation within the market that the Japanese economy will achieve a virtuous cycle of growth and distribution, and that this is also reflected in stock prices. It is necessary to ensure the virtuous cycle of growth and distribution and that the high stock prices become a sustained trend, by facilitating domestic investment that contributes to solving social issues and ensuring greater consumption by raising wages. In order to do so it will be crucial to continue initiatives that draw on collaboration between the public and private sector.
(In response to a question about some suggestions that the current stock market rally is a bubble) While I am aware of such an opinion, I think that the Nikkei average surpassing its all-time high is a development that we can genuinely celebrate and that we should treat it as an opportunity to renew our resolve to achieve a virtuous cycle of growth and distribution.
Fiscal Consolidation
(In response to the suggestion that if the Bank of Japan's monetary policy is normalized, the rise in policy interest rate is likely to prompt an increase in the cost of interest payments for government bonds, leading to greater fiscal burden) If a virtuous cycle of wages and prices is achieved along with moderate inflation, the real balance of government debt will decrease in value, and tax revenue will also increase.
Ensuring the effects of moderate inflation will of course require achieving fiscal consolidation over the medium to long term, and it will be necessary to conduct dynamic economic and fiscal management, including expenditure reform.
Wage Increases
(In response to a question about the current development that a succession of companies in industries such as the food service industry, in which there is a severe labor shortage, and the automotive industry have made early decisions to commit to high wage increases in this year's spring labor-management negotiations) This is a positive development. The automotive industry in particular is achieving good results now that the shortage of semiconductors has been resolved and due to yen depreciation. I hope that the automotive industry, which forms a broad supply chain, will pursue appropriate price pass-through of costs, including labor costs, in order to ensure that the momentum for wage increases spreads not only among major enterprises but also to SMEs. While the conditions faced differ from industry to industry, I hope that this positive trend will become widespread, and establish itself as a social norm.
Moreover, in macroeconomic terms, it is not a bad thing for substantial wage increases to be made in industries suffering marked labor shortages, such as the food services industry, as this will lead to labor mobility and ultimately stimulate economic regeneration. It is important to boost Japan's national productivity by promoting smooth labor mobility. As a premise for this, it is essential to shift to and develop a safety net that facilitates labor mobility, through such steps as enhancing reskilling and other such recurrent education.
Recruitment Activities
(In response to a question about the impact of birthrate decline and labor shortages on companies' recruitment activities) As companies each devise means of tackling the labor shortage, I believe that the direction they will take will entail more diverse approaches to recruitment, such as increasing year-round recruitment and recruitment of experienced workers, as opposed to only mass recruitment of new university graduates.
(In response to a question about the trend of companies commencing their new graduate recruitment activities at an earlier timing in the academic year) There are currently rules formulated and published by the government to determine the schedule for recruitment and employment activities. The universities also earnestly request that students be able to fully concentrate on their studies. On the other hand, companies are diversifying their recruitment approaches, to include approaches such as recruiting all year round and recruiting experienced workers. Discussion will surely be pursued regarding what kinds of rules are now appropriate, while paying attention to these important needs and considering the current social developments.
Support for Ukraine
(In response to a question about future support by Japanese companies for the reconstruction of Ukraine) While, given that Ukraine is even now still at war, the damage and suffering is surely on a different level, Japan does at the least possess valuable experience of recovery and reconstruction, having recovered from a number of natural disasters. We are also comparatively highly advanced in the fields of agriculture, medicine, and transportation infrastructure. We can surely utilize such insights to contribute to the reconstruction of Ukraine. I also expect an increasing number of private companies to provide support from a humanitarian perspective.
The Japan-Ukraine Conference for Promotion of Economic Growth and Reconstruction held on February 19 saw the signing of 56 cooperation agreements between private companies, government agencies, and other bodies from both Japan and the Ukraine. As the next essential step, it is crucial that each company or other such organization actually visits the Ukraine to investigate the possibilities for, and implement, concrete support. Firstly, I would like to hear from government officials in more detail about the operational policy and other such matters related to the Japanese government's proposed measures to partially relax the restrictions on travel to the Ukraine.
Political Funding
(In response to a question on appropriate approaches for political contributions by companies) Above all, compliance with the rules set out in the Political Funds Control Act and the transparency of political funding are being called into question. I would like to see thorough discussion between the political parties and factions with the aim of reviewing the rules in order to secure thorough compliance and ensure transparency.
(In response to a question on whether it is appropriate to allow public access to sessions of the House of Representatives' Deliberative Council on Political Ethics addressing the political funding issue involving LDP party factions) The individual Diet members surely each have varying understandings of, and thoughts and opinions on the significance of, appropriate approaches to, and other factors regarding political funding. This should ultimately be determined in the Diet.
Osaka-Kansai Expo
(In response to a question about the fact that on February 22 Yoichi Miyamoto, chairman of the Japan Federation of Construction Contractors, called for careful coordination of the schedules of the different construction works, on the grounds of having heard that completion of the Grand Roof, known as "the Ring," of the Osaka-Kansai Expo venue will restrict how the necessary heavy machinery and materials can be brought in for the construction of the pavilions within the Ring, and other such areas) While recognizing that the deadline for the completion of construction is tight, Miyamoto is firmly determined that it will be completed on time, without fail. His statement was surely based on this determination and therefore intended as a renewed plea to the Japan Association for the 2025 World Exposition to ensure an environment in which there are no hinderances to construction.