- Middle East Situation
- Foreign Exchange Intervention
- Visit to Japan by U.S. Treasury Secretary Bessent
- Discretionary Labor System
- Japan-Russia Relations
Middle East Situation
(In response to a question about views on market movements amid heightened tensions in the Middle East) With the outlook entirely opaque and the situation now dragging on, we are deeply concerned. Our understanding is that various dialogues, both public and behind-the-scenes, are being pursued between the parties directly involved and among countries in the region, and we strongly hope to see progress toward an early de-escalation that includes the safe navigation of the Strait of Hormuz.
On the market front, while growing uncertainty has pushed crude oil prices higher, the broader trend has been a continued rise in equities. Markets are being influenced by a range of expectations and dynamics, but the underlying driver of the rally to date has been expectations surrounding active investment in AI and semiconductors in the United States, and we suspect that momentum has spilled over into the Japanese stock market as well.
The underlying trajectory of the Japanese economy is one of moderate recovery, and corporate earnings have remained firm. Going forward, however, attention must be paid to high prices and the deterioration of consumer sentiment. In addition, should the disruption in the Middle East be prolonged, the risk that supply concerns and further price spikes could hamper economic activity will continue to require close attention.
(In response to a question about calls for energy conservation and the need to curb demand for oil and petroleum-related products) The government is currently making every effort to diversify supply sources, and we highly commend the fact that, together with private-sector efforts, a degree of progress is being achieved. At the same time, it is also true that our member companies have voiced concerns about supply uncertainty and price increases should the situation drag on. The range of products affected is broad and, with the summer demand season approaching and the course of the U.S.-Iran negotiations difficult to predict, it is hard to make blanket statements about how this will play out on both the supply and demand sides of energy. What we share with the government is that thanks to a range of public-private efforts, there is no immediate risk of disruption to supply volumes at least. However, the outlook is hard to predict, responsiveness to evolving conditions will be essential, and there may well come a point at which comprehensive measures spanning both the supply and demand sides become necessary.
Foreign Exchange Intervention
(In response to a question about reports that the government and the Bank of Japan are believed to have conducted yen-buying, dollar-selling foreign exchange intervention during the Golden Week holidays) Our basic understanding of the weak yen is that it largely reflects a range of market expectations and the speculative activity of short-term players. At the same time, it may also be a signal regarding structural issues such as Japan's energy situation, and we will need to continue to watch developments closely. Over the medium to long term, what is important is to build resilient fundamentals that are not swayed by such short-term moves, by firmly establishing an investment-driven economy and lifting the potential growth rate.
We are not in a position to know whether foreign exchange intervention has taken place. Decisions on intervention are for the government and the Bank of Japan to make based on a timely and appropriate assessment of the situation.
Visit to Japan by U.S. Treasury Secretary Bessent
(In response to a question about expectations for the visit to Japan by U.S. Treasury Secretary Bessent) We are aware that Secretary Bessent will be visiting Japan. This is an important opportunity to engage with the Japanese government on energy security issues, which extend to economic security.
Discretionary Labor System
(In response to a question about what discussions took place at today's meeting of the Chairman and Vice Chairs, amid strong pushback from labor against the expansion of the discretionary labor system) One observation shared at the meeting was that, while labor-side has been able to reach agreement with management-side on a range of issues, including wage increases, the discretionary labor system is the only issue on which views diverge. For Keidanren's part, we believe that the one and only path forward is to communicate carefully and devote ourselves to hearing out labor's views.
The government has likewise made expanding the discretionary labor system a policy aim, and the issue has been positioned as an important theme within the Council for Japan's Growth Strategy. Even so, we intend to respond carefully to labor's concerns. Our policy proposal also states that adequate safeguards will be put in place against abuse of the system and against the long working hours and resulting harm to workers' health that could accompany it. Our position is that the review of the discretionary labor system should proceed on the basis of such comprehensive safeguards.
(In response to a further question about views on tightening regulations to ensure workers' health as part of the discussion on expanding the discretionary labor system) Companies themselves have long recognized the importance of measures to ensure workers' health, as part of the broader trend toward health and productivity management. Ensuring workers' health through regulations is one possible approach. Even so, the decision on whether to adopt the discretionary labor system should be considered as companies take autonomous and proactive measures.
(In response to a question about the need to expand the discretionary labor system in light of the Ministry of Health, Labour and Welfare's Five-Year Comprehensive Review of the Implementation of the Work Style Reform Related Laws, published in March, in which roughly 10 percent of workers said they wanted to increase or somewhat increase their working hours, while roughly 90 percent said they wanted their hours to remain the same, to reduce them somewhat, or to reduce them) First, the discretionary labor system would never apply to all workers. Moreover, among those who want to reduce their working hours, there are people who aspire to flexible and autonomous ways of working. Some workers facing circumstances such as childcare or nursing care believe that, under the discretionary labor system, they would be able to work without being bound by fixed hours, fully apply their abilities, and deliver results. Because the discretionary labor system is fundamentally a system that applies only with the worker's own consent, we must respond to the fact that there is a certain level of demand for its application.
Another point of great significance is that the discretionary labor system can serve as a catalyst that further opens the door to broader discussion of flexible and autonomous ways of working.
(In response to a question about whether it is appropriate for the Council for Japan's Growth Strategy, where labor organizations are represented by fewer members than management, to be the forum for discussing the expansion of the discretionary labor system) Flexible and autonomous ways of working are an important element of growth strategy. At the Council for Japan's Growth Strategy, I have been virtually the only management-side member to raise the topic of the discretionary labor system in the discussion, with labor-side members then voicing their opposition in response. In that sense, the discussion can be said to be proceeding in a way that incorporates the views of both labor and management.
Management-side believes it has a full understanding of labor-sides' concerns regarding the discretionary labor system, and it is important that the system be designed and operated with a range of safeguards in mind.
As for the relationship with the Labour Policy Council, the Council for Japan's Growth Strategy is by no means operating in isolation. Our understanding is that the discussion, with due regard for its balance with the Labour Policy Council, is moving forward with appropriate checks in place.
Japan-Russia Relations
(In response to a question about the Ministry of Economy, Trade and Industry's plan to dispatch government officials to Russia at the end of May for the purpose of communication with the Russian side, potentially with Japanese companies in attendance) We are aware of the Ministry of Economy, Trade and Industry's announcement that Japanese government officials will travel to Russia on official business. We understand that the purpose is to facilitate government-to-government communication and to strengthen cooperation with Japanese companies operating in Russia. Our understanding is that the Japanese government has long been engaged in working-level exchanges with the Russian authorities. As for any exchanges between the Japanese government and individual companies, we have no knowledge of any such exchanges.