Fukao Kyoji (Faculty Fellow, RIETI) and Makino Tatsuji (Hitotsubashi University)   In order to achieve the Kishida administration’s policy goal of raising wages, it is necessary to understand why real wages in Japan have been stagnating for the last two decades. This article therefore examines the reasons for the prolonged stagnation of wages in Japan using long-term data from the JIP Database of the Research Institute of Economy, Trade and Industry (RIETI) and Hitotsubashi University, and considers measures that should be taken. The labor productivity of a country as a whole is measured by how much real gross domestic product (GDP) is produced per hour worked. In Japan, real GDP per hour worked in 2018 was 4,416 yen (in 2018 prices). Of this, 2,580 yen accrued to workers in the form of wages, employers’ social security contributions, etc., so that the labor share of ... ... [Read more]

Urakawa Kunio, Professor, Faculty of Economics of Kyushu University   Key points Average yearly income trending downward in the bottom 40% income bracket Income redistribution limited by current tax and social security systems Lack of safety net for types of employment with a high risk of instability COVID-19 has had a major impact on the world economy. Japan’s economy has been greatly impacted, with GDP for FY2020 down 4.4% from the previous year. This is larger than the decline of 3.6% in 2008 when the Lehman Brothers collapse occurred. The Quarterly Estimates of GDP for Jul.–Sept. 2021 released on November 15, 2021, showed negative growth of -0.8% compared to the preceding term, the first negative growth in two quarters. Full economic recovery will likely take more time. The economic impact of COVID-19 has been felt most keenly in the service industry sector, including air ... ... [Read more]

Ito Shingo, Senior Economist, Institute for International Economic Studies   Key points Aim to reduce dependence on the United States and contribute to the global economy Membership will inevitably require major adjustments to the economic system Negotiations should consider China’s economic characteristics and security exceptions On September 16, China applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Membership of this high-level FTA will however inevitably require China to implement bold reform and opening up, giving rise to various observations regarding the true motive behind its application and the seriousness of its intention. In this regard, the Chinese government has stated that its application to join the CPTPP signals (1) its will and commitment to achieving continuous deepening reform and opening up further; and (2) its support for free trade and its will to contribute to the recovery and growth of ... ... [Read more]

Komine Takao, Professor, Taisho University   Key points Uniform benefits go to savings and do not boost consumption Overall income slump is more severe than widening disparities Speed up industrial and corporate metabolism and regulatory reforms Following the lower house election, I would like to consider the future direction of economic policies. The Kishida administration’s economic policies have so far only consisted of slogans such as “a new form of capitalism,” “Reiwa double income,” “without distribution, there will be no subsequent growth,” and “neoliberal policy shift.” Depending on how these are concretized in the future, they may take the economy in a good direction or in a bad direction. The first thing that will be required of future economic policies is a switch from election mode to practice mode. Election mode, which has been active throughout the Liberal Democratic Party presidential election and the ... ... [Read more]

  Sugimoto Kazuyuki, former Chairman of the Japan Fair Trade Commission   The Japan Fair Trade Commission (JFTC)’s investigations into Apple Inc. effectively came to a close on September 1, 2021 when Apple announced it would make changes to some global regulations in 2022. Apple submitted an application for changes to regulations that would let users avoid the 15–30% delivery commission for “reader apps” that offer subscriptions for content like books, music, videos, etc., which some media outlets have called an “unusual conciliation.” Currently, all applications (hereinafter “apps”) used by iPhones and other Apple products must be downloaded from the App Store. Until now, application developers had to pay a commission to sell their apps, the so-called “Apple Tax.” In other words, they paid a “protection price” to a “bookmaker.” With the new decision by Apple, developers won’t have to pay the “Apple Tax” ... ... [Read more]

Ito Kunio, Professor Emeritus, Hitotsubashi University   Key points Japanese companies rank highly worldwide for number of institutions supporting TCFD Mandatory financial disclosures should avoid disclosure of static information Need to promote corporate behavioral change through dialogue with investors   In response to worsening climate change, the Japanese government has set out its policy of becoming carbon neutral by 2050. I would like to put forward two effective approaches. The first is the disclosure by companies of just the right amount of information – not too much and not too little. The second is the proper evaluation of disclosed information by investment and loan institutions and the provision of ample funds for decarbonization activities and innovation. The Task Force on Climate-related Financial Disclosures (TCFD) is a common framework for driving the world toward climate-related financial disclosures. The Task Force was established in 2015 by ... ... [Read more]

Shirai Sayuri, Professor, Keio Universit   Key points Governments should promote measures to develop green finance Governments should support environmental projects by actively issuing green bonds The Bank of Japan should make greater contributions to climate issues through purchasing green corporate bonds and Exchange Traded Funds (ETF)   Green finance that supports improvements in environmental issues has drawn attention in recent years. To limit the global average rise in temperature to 1.5 degrees by the end of this century as compared to pre-industrial levels, a large amount of capital spending and R&D is needed to reduce greenhouse gas (GHG) emissions to net zero by 2050. According to an estimate by the International Energy Agency (IEA), more than double the current annual global investments (550 trillion JPY) will be needed by 2030 and around the same amount will be needed until 2050. Europe is leading ... ... [Read more]

Tsuru Kotaro, Program Director and Faculty Fellow, Research Institute of Economy, Trade and Industry (RIETI)   Despite the progress in vaccination, the COVID-19 pandemic continues to rage on. Following the issuance of the fourth declaration of a state of emergency, the government has frequently called for companies to reduce the number of commuting workers by 70%, but there has been little progress in the effort to reduce the flow of commuters. Looking back at the pre-pandemic status of teleworking arrangements, including working from home, although large and listed firms were accelerating the teleworking schemes, the number of people actually working from home continued to be low. Under the COVID-19 crisis, particularly since the issuance of the first declaration of a state of emergency in April 2020, the percentage of employees working from home (telework rate) has risen rapidly (see Figure 1). According to various ... ... [Read more]

Morinobu Shigeki, Senior Research Fellow, The Tokyo Foundation for Policy Research   Key points EU considers tax to collect the difference in carbon prices A carbon tax on emissions is simple and straightforward Use of carbon tax revenues should take into account growth strategy   On July 14, the European Commission (EC) announced its intention to introduce a carbon border adjustment mechanism (CBAM). The CBAM will apply the European Union Emissions Trading System (EU ETS) to imports of specific products to regulate greenhouse gas emissions in imported products, in order to prevent “carbon leakage,” whereby EU companies shift production bases to countries with less stringent carbon regulations. Full-scale introduction of the mechanism is planned from 2026 for five products: cement, electricity, fertilizers, steel and aluminum. Under the new mechanism, importers will have to purchase certificates to cover their CO2 emission per ton in accordance ... ... [Read more]

Maeda Yudai, Executive Editor-in-Chief of EnergyShift The Skyrocketing Greenhouse Gas Reduction Target The global wave of “decarbonization” has already descended upon Japan, and this has led to a great change in that direction. On April 22–23, the Leaders Summit on Climate hosted by the United States was held online after President Biden called for the summit, and there, Prime Minister Suga declared that Japan aims to reduce its greenhouse gas emissions by 46% in fiscal year 2030 from its fiscal year 2013 levels. The original goal was for a 26% reduction, so this number was close to double the original goal. FY 2013 levels are used as reference for these reduction goals, and Japan is already progressing well with energy conservation compared to the rest of the world. I get the sense that energy conservation is quite strict among the population, and industry may ... ... [Read more]