Abenomicspublished in May 2017 for Future Growth, for Future Generations, and for a Future Japan That Is Robust
Total Page:16
File Type:pdf, Size:1020Kb
ABENOMICSPublished in May 2017 For future growth, for future generations, and for a future Japan that is robust. We should look to the future, rather than worry about the present. Japan may be aging. Japan may be losing its population. But, these are incentives for us. – Prime Minister Shinzo Abe INTRODUCTION About Abenomics Setting the economy on course to (%) Nominal GDP and growth rate2 (JPY tril) 3.0 700 overcome deflation and make a steady 2.8 2.6 BEFORE ABENOMICS 2.5 recovery with the Three Arrows 2.5 2.1 In early 2013, after two decades of economic stagnation, Prime Minister 1.5 600 Shinzo Abe unveiled a comprehensive 1. 5 600 economic policy package to sustainably revive the Japanese economy while 554 540 maintaining fiscal discipline. 532 0.5 518 This program became known as 0.2 507 0 500 Abenomics. 494 495 -0.5 The centerpiece of Abenomics has been GDP (Expenditure Approach) the three “policy arrows” targeted at -1.1 (Right scale) aggressive monetary policy, flexible fiscal Nominal GDP growth rate policy and growth strategy including -1.5 400 (Left scale) structural reform. FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 TARGET (Estimate) (Forecast) Since then, Abenomics has achieved Jobs to applicants ratio Dependency ratio on remarkable progress. (JPY tril) Corporate ordinary profits3 (X) and unemployment rate4 (%) (JPY tril) Japanese Government Bonds6 (%) For example: 80 1.75 5.0 60 57.6 57.7 50 68.2 4.5 • Nominal GDP grew from 495 to 532 1.43 4.5 47.9 1.50 50 1 4.0 44.3 35.6 trillion yen between the fiscal years of 60 35.3 1.25 3.5 40.9 2012 and 20152 2.8 40 45.3 3.0 34.4 34.4 1. 0 0 • Annual corporate ordinary profits 40 2.5 30 25 0.74 0.92 increased by 20 trillion yen between 0.75 2.0 3 20 the fiscal years of 2012 and 2015 0.50 1. 5 20 0.44 1. 0 • Unemployment rate declined from 0.25 10 0.5 4.3% to 3.1% between 2012 and 20164 0 0.00 0.0 0 0 • Core CPI improved by 3.0% between FY2011 FY2012 FY2013 FY2014 FY2015 2012 2013 2014 2015 2016 2017 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2012 and 20165 (Forecast) Job to applicants ratio (Left scale) Amount of JGBs issued (Left scale) And now it is gaining speed. This document Job to applicants ratio of Tax revenues (Left scale) regular employees (Left scale) Level of dependence on JGBs (Right scale) offers the latest on the reforms being Unemployment rate (Right scale) implemented to reach a GDP of 600 trillion 1 Average exchange rate for March 2017: USD = JPY 113 yen, including work style reform to raise 2 Source: Cabinet Office “National Accounts”; “Fiscal 2017 Economic Outlook and Basic Stance for Economic and Fiscal Management”; The Japanese fiscal year starts in April and productivity and increase the workforce in concludes in March of the following year 3 Source: Ministry of Finance “Financial Statements Statistics of Corporations by Industry,” all industries, all (firm) sizes, seasonally adjusted figures the midst of demographic changes. 4 Source: Ministry of Health, Labour and Welfare “Statistics on Employment Referrals for General Workers,” seasonally adjusted figures; Ministry of Internal Affairs and Communications “Labor force survey” 5 Source: Statistics Bureau, Consumer Price Index. 1.3%, excluding the consumption tax rate change in April 2014. Core CPI = All items, less food (less alcoholic beverages) and energy 1 ABENOMICS 6 Source: Ministry of Finance ”Public Finance Statistics Book” TOPIC: THE FY2017 BUDGET Opening the path Engines that keep the positive to the future: The budget to achieve economic growth while economic cycle spinning maintaining fiscal discipline was passed on March 27. The focuses for this fiscal year are: FURTHER STIMULATING THE ECONOMY • Promote Industry 4.0 by encouraging private investment in R&D in science and technology1 • Promote inbound tourism CREATING A POSITIVE ECONOMIC CYCLE OF GROWTH AND RE-DISTRIBUTION • Increase disposable income by lowering the employment insurance premium by 0.2%2 • Expand childcare support by increasing the number of: » childcare workers with improved labor conditions » available childcare options • Extend the childcare leave benefit from 1.5 years to 2 years for those on the waiting list CREATING OPPORTUNITIES FOR CHILDREN • Provide higher education for students from challenging economic circumstances by: » Introducing a grant-type scholarship with a base of 30,000 yen per month » Eliminating virtually all academic requirements of interest-free scholarship Boost Drive Innovation Energize Corporate loans for students from low-income families 1 Productivity 2 and Trade 3 Activities REFORM WORK STYLE p. 3–4 p. 5–8 p. 9–10 TO INCREASE PRODUCTIVITY • Encourage companies that are: Boost productivity by changing work Implement structural reforms such as Continue to create a business-friendly » Reforming their evaluation scheme style and diversifying the labor force deregulation in the agricultural sector environment and promote inward FDI » Introducing equal pay for equal work to cope with the demographic change and other areas with growth potential, through robust corporate governance » Small and medium-sized enterprises as well as expand international trade and further corporate tax reduction (SMEs) introducing a minimum Leads to wage increase and interval system for working hours employment, resulting in higher Leads to the creation of new demand Leads to rise in corporate performance income and a rise in consumption and increased capital investment 1 Artificial intelligence (AI), robots, Internet of Things (IoT), automated driving and cybersecurity 2 For three years THE FIRST STEP IN REALIZING FUNDAMENTAL WORK-STYLE REFORM 1 BOOST Change how we work PRODUCTIVITY Increasing productivity and Legislative rules and guidelines of “equal pay for labor participation are keys to equal work”: Eliminate the irrational gaps in the working conditions between regular and non-regular workers in order sustaining economic growth to enable non-regular workers to be fairly evaluated and to under the demographic work with higher motivations change that Japan is experiencing. In realizing this, Regulatory limit on overtime work with penal regulations: work-style reform is the biggest Define the maximum hours of overtime work and revise challenge we need to tackle. legislation that will concretely establish a limit that cannot be exceeded even in temporary and special situations On March 28, 2017, under Prime Minister Abe’s strong Human resource cultivation and supporting reemployment: initiative as chair, the Council Support relearning of individuals, such as by enabling women, for the Realization of Work who once take child-rearing leave, to receive recurrent Style Reform has formed a education for skill improvement and re-employment promising plan to realize a society where everyone can Promoting flexible work styles: Promote teleworking, side jobs and multiple jobs with a variety of policy measures, choose various and flexible including the renewal of guidelines work styles. Based on this plan, the Introducing new scholarship programs for children: Establish new systems that will ease economic burdens to Administration will implement encourage children to attend higher education regardless of structural and legislative economic status transformations. WORK-STYLE REFORM Improved Wage increase PRODUCTIVITY GROWTH & Higher corporate PARTICIPATION RATE INCREASE income performance Employment DIVERSITY IN LABOR FORCE 3 ABENOMICS From 2012 to 2016, Embrace diversity the number of women joining the workforce increased by about Given the declining work WOMEN SENIORS population Japan faces today, 1.5 million we need to include more Lessen the burden of working Facilitate change through Source: Ministry of Internal Affairs and Communications: “Labor Force Survey” people in the workforce. parents and accelerate women’s engagement with businesses promotion That is why our work and • Provide a choice to extend business customs are in the More information: retirement age for those who Women in management http://www.japan.go.jp/women process of being reassessed, want to work, as well as support positions in the private sector and a wide range of working • Secure additional childcare companies that extend the limit approaches capacity for approximately 500,000 opportunities is becoming • Provide support in matching job children by the end of FY2017 accessible to women, senior openings and applications % citizens and expatriates whose • Increase childcare leave benefits 10 from 50% to 67%, applied to the Source: Ministry of Health, Labour and Welfare: chances were limited before. “Basic Survey on Wage Structure” first six months of leave1 EXPATRIATES • Mandate businesses to disclose information on the employment Leverage legislative reforms to status of women and their promote and expand opportunities future targets 71% • Expedite permanent residency by of seniors report • Through collaboration with the introducing “Japanese Green Card for that they would like to continue Tokyo Stock Exchange, select Highly Skilled Foreign Professionals” to work past retirement age and promote enterprises that to obtain visas after a year of arriving, Source: Cabinet Office, Annual Report on encourage women’s success in the under certain conditions the Aging society workplace as “Nadeshiko Brands” • Promote expatriate entrepreneurship • Provide female candidates with in Tokyo, Niigata City, Fukuoka City, executive leadership training Sendai City, Aichi Prefecture and programs from the world’s Hiroshima Prefecture leading business scholars