Thursday, 26 February 2015

Just do it

Nguồn tin:

THE prime minister, Shinzo Abe, clearly wants to convey a certain impression. In a policy speech to the Diet this month, he repeated the word kaikaku, or reform, no fewer than 36 times. Indeed, he promised “the most drastic reforms since the end of the second world war”, in which he would break the hold of vested interests on the Japanese economy. The prime minister and his advisers know exactly what steps are needed to raise Japan’s long-run rate of growth. Less clear, as ever, is whether they will take them.

So far as the economy is concerned, the government now has a kinder wind at its back. In mid-February came news that Japan pulled out of recession in the final quarter of last year, growing at an annualised rate of 2.2%. A conundrum for much of last year was the failure of exports to respond to a currency made much weaker by the central bank’s vast quantitative easing. Yet in the last quarter exports jumped at last, by an annualised 11%.

A sharply lower oil price, meanwhile, has offset the severe drag on demand that came from raising the consumption (value-added) tax last April from 5% to 8%. Now comes the prospect of bigger pay packages. Half of companies in a recent survey plan to raise basic wages this year, citing a tightening labour market and government pressure.

As for those vested interests, reformers point to Mr Abe’s attack on JA-Zenchu. This is the powerful bureaucracy and lobby group at the heart of the vast network of farming co-operatives known as Japan Agriculture. It was thought untouchable because of its close ties to politicians in Mr Abe’s Liberal Democratic Party (LDP)—in rural areas, JA-Zenchu has a reputation for being able to get out the vote.

Yet this month Mr Abe forced through a plan to slash JA-Zenchu’s powers. It will no longer audit the 700 co-operatives or be allowed to guide their policy. The move is supposed to help make farmers more competitive. It comes at a time when negotiations with America over the Trans8-Pacific Partnership (TPP), a 12-country free-trade agreement, were supposed to be coming to a head. JA-Zenchu opposes reductions in farm tariffs demanded by America.

The most substantial of Mr Abe’s reforms to date, however, has been to force Japan’s business establishment to accept useful changes in corporate governance. On June 1st a new code will come into effect stipulating that, among other things, listed companies have at least two outside directors on their board.

Significant though these two measures are, along with others (including helping women in work), they fall far short of what Japan’s gummed-up economy requires. That is why a key test will be whether the government pushes on with bold changes to the labour market this year. One reason for stagnant wages is that companies with too many workers cannot easily fire them, even with generous compensation.

Yasutoshi Nishimura, a vice-minister in the cabinet office, says that Japan badly needs to shift from a system in which graduates join a single company for life to one in which people can easily switch firms. In the spring the government will propose ways of allowing permanent workers to be fired in return for severance pay. It is the most critical—and delicate—of Mr Abe’s proposed reforms. Implementing it, backers say, will take time.

The government also promises to bring down the public debt, which stands at more than 240% of GDP. It will soon seek Diet approval for a ¥96.3 trillion ($810 billion) budget, a record. Higher tax receipts mean that annual borrowing requirements should not rise. But the government is on course to flunk a key target to balance the budget by 2020.

Mr Abe is to report in the summer on how to repair the public finances. Before then, a key economic-policy council will present proposals to cut social spending. These could include bringing in the private sector to deliver services, according to a council member, Takeshi Niinami. A battle with Japan’s powerful doctors’ lobby, which opposes increased competition in medical services, also looms. Mr Niinami says the skills to push such changes through demand patience, and subtle abilities to bring round opponents of reform. Will the distinction between canny patience and dithering be clear?

Đăng ký: Hoc tieng anh



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