Exchange Rate
(In response to a question regarding the optimal dollar-yen exchange rate and the expected trend going forward) Exchange rates reflect an economy's fundamentals and therefore also serve as an evaluation of a country. Without all the necessary information to hand, I cannot specify a particular optimal rate, but I would say that the current rate of over 150 yen to the dollar does represent excessive yen depreciation. I do not believe Japan is that weak economically. Given that the Bank of Japan (BoJ) is set to maintain accommodative financial conditions for the time being, despite deciding on a policy shift away from large-scale monetary easing, I think that in the short term the yen will continue to depreciate. In the medium- to long term, however, the rate is likely to correct itself to an appropriate level. Where exchange rate trends are concerned, we need to take a long view.
(In response to a question regarding the advisability of governmental intervention in the currency market to correct excessive yen depreciation) There are several levels of currency market intervention. I think it is important for the government to demonstrate that it is ready and able to intervene at any time, even if it does not actually intervene.
The 2024 Problem
(In response to a question regarding the so-called 2024 problem in logistics resulting from the adoption of new regulations capping truck drivers' overtime work from April: what are its impacts on businesses and what is the logistics industry doing to adapt?) According to estimates by NX Logistics Research Institute and Consulting, if radical steps are not taken, Japan's truck delivery capacity will be 14.2% below the level required in the fiscal year commencing April 2024, and 34.1% below the level required in the fiscal year commencing April 2030. This gives cause for concern regarding the impacts on businesses, as well as on the areas that produce agricultural products and seafood, and on the lives of those living in Japan.
Japan's trucking companies are calling for cooperation from the senders and receivers of shipments with a view to resolving issues such as long waiting times for drivers during pick-ups. Meanwhile, the government is supporting these efforts by improving the system for monitoring shipment senders and primary shipping contractors via a specialized truck investigation unit. Given that low load factors are also an issue, the industry must make further progress with logistics-related digital transformation (DX) offering effective means of achieving overall optimization. It is of paramount importance that not only the government and the relevant industrial sectors, but also those ordering goods for delivery, and consumers in general, join forces to continue addressing this problem throughout society as a whole.
Wage Increases
(In response to a question regarding what should be done to maintain the current momentum toward wage increases during next year's spring labor-management wage negotiations and beyond) I noted in the previous press conference that wage increase momentum this year is substantially higher than last year. As Keidanren continues to call for structural wage increases and a virtuous cycle of wages and prices, I regard this momentum as the result of employees and management at corporations paying attention to our recommendations and engaging in serious negotiations. And we must not overlook the fact that companies are increasing wages not only in response to price trends, but also in response to labor shortages.
However, there is a limit to how long wage increases based on productivity improvement and enhancement can continuously keep up with rapid price inflation at any given time. It is therefore crucial to establish stable, moderate price inflation at around 2%, and I would like the government and the BoJ to administer policies intended to achieve that aim. It is only if the current wage increase momentum continues or accelerates next year and the year after, that we can say structural wage increases have been established. Keidanren is braced to continue its efforts in this regard for years to come.
(In response to a question regarding the reasons why Japanese corporations made no progress in increasing wages for the past 30 years) One contributing factor is that, under prolonged deflationary conditions, and faced with the "three excesses" of debt, capacity, and labor, Japanese corporations accelerated their expansion into overseas markets as a survival strategy, and as a result their outward direct investment increased. The corresponding downturn in investment within Japan, combined with stalled consumption, caused stagnation in both wages and prices. It is probably also true to say that excessive pursuit of US-style shareholder capitalism played a part.
At the present time, however, prices have started rising, albeit as a result of cost-push inflation. Keidanren is calling for wage increases, recommending pay scale increases as a valid option, and this year's momentum toward wage increases is indeed substantially higher than last year's. We must not miss this opportunity to establish a sustainable virtuous cycle of wages and prices through wage increases based on productivity improvement and enhancement by corporations, together with moderate price inflation at around 2% established by the government and the BoJ.
Kobayashi Pharmaceutical
(In response to a question regarding the chairman's perspective on the increasingly widespread health damage caused by Kobayashi Pharmaceutical Co., Ltd.'s health-food products containing beni-koji [rice fermented with red yeast]) I saw in the news that some people have even lost their lives. I offer my condolences to the families and friends of those individuals, and extend my sympathies to all those affected. I hope that Kobayashi Pharmaceutical will promptly investigate the cause of the problem and make certain that it compensates everybody whose health has been damaged, voluntarily recalls all the products in question, and ensures that the issue will never occur again.
(In response to a question regarding Kobayashi Pharmaceutical's slow response, which led to a delay of more than two months between the first report of illness and the announcement of a voluntary recall) The details are still unclear, so at this stage it is difficult to assess why it took so long, but it certainly did seem to take quite some time. What Kobayashi Pharmaceutical needs to do now is prevent any further damage to health; I would therefore like the company to dedicate itself to disseminating relevant information and ensuring that all the products in question are recalled, in addition to investigating the cause of the problem.
Nippon Steel
(In response to a question regarding Nippon Steel Corporation's proposed acquisition of leading American steelmaker United States Steel Corporation) The final decision on Nippon Steel's acquisition of U.S. Steel should be made impartially and in accordance with due process.