• Draft Budget for FY2020 and Fiscal Management in the Years to Come
• Suspension of Stock Lending by Government Pension Investment Fund (GPIF)
• Employment
• Relations between Japan and South Korea
• Economic Relations between Japan and Iran
• Kanji of the Year

Draft Budget for FY2020 and Fiscal Management in the Years to Come

The Abe administration has put together a forward-looking draft budget for the fiscal 2020 that will contribute to future growth. Rather than looking bleakly to the future, I prefer to hope that it will be possible to meet the spending requirements of the budget through tax revenue.

Carrying out appropriate evidence-based verifications, and ensuring that these are reflected in formulating policy for the following fiscal year, will also be effective in helping to achieve more efficient fiscal management.

Suspension of Stock Lending by Government Pension Investment Fund (GPIF)

Although I appreciate that the mechanism of stock lending has a role to play, in many cases it tends to increase speculation. Given the highly public-interest nature of the GPIF, the move to suspend stock lending is the appropriate decision.

Employment

More Japanese companies need to switch from a business model that seeks to make a profit by providing domestic and international clients with commodities and services of superior functionality and quality to a new model that joins together with clients to consider ways of providing added value. If this happens, I am confident that this will naturally contribute to the development of the Japanese economy as a whole.

The kind of human resources capable of responding to this kind of change are difficult to nurture under the traditional Japanese-style employment system, which has been based around cohort hiring of new graduates, seniority-based promotion, and lifetime employment. Changes in companies' hiring and employment patterns must be accompanied by improvements in employee engagement. It will not be sufficient to rely solely on the Japanese-style employment system that has prevailed in the past, and some combination with job-based hiring and other forms of limited regular employment is likely. This will also serve to increase employment mobility. The reality is that companies pursue economic, environmental, and social values. And for employees too, a sense that the work they do contributes to society tends to bring greater fulfillment and morale enthusiasm. There is a need for deeper-level discussions between labor and management that will take full account of these changes.

Relations between Japan and South Korea

Relations between Japan and South Korea are complex at present. On an inter-government level, an environment is coming into place that will make it easier to convey messages effectively in both directions. In terms of what the business communities in the two countries can do, Keidanren and the Japan-Korea Economic Association will continue to serve as windows for dialogue on the Japanese side. We will continue to do whatever we can, gradually expanding the channels for dialogue.

In the current circumstances, where export controls by the Japanese government have escalated the situation and caused doubts about the survival of the General Security of Military Information Agreement (GSOMIA) between the two countries, it is difficult to conjecture about how grounds for compromise will be found in the future.

Economic Relations between Japan and Iran

Economic relations with Iran are subject to numerous limitations owing to sanctions imposed by the United States and other factors. In this context, any major development of bilateral relations with Iran seems unlikely in the short-term, and it will be difficult for Japan to embark on independent diplomacy efforts on its own. But Iran is a country with a long history and high levels of education, which has had friendly relations with Japan. Japan is likely to continue dialogue and, while giving due consideration to the international situation regarding Iran, will look to develop a relationship of cooperation with Iran.

Kanji of the Year

[In response to a question asking Chairman Nakanishi to nominate a kanji character that sums up the current state of society] I think I'd probably choose "mi (未)," the first character in "mirai" (future), in the sense of rethinking the future. The challenge of climate change is just one example of an area in which actions are likely to change considerably depending on how we think about the future.