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 Abe, who took office 18 months ago pledging to end deflation and
generate sustainable growth with a three-pronged strategy of
monetary easing, fiscal spending and reform, is due to outline the
latest tranche of his so-called "Third Arrow" of long-term economic
policies.
The package will include steps to boost the role of working women -
seen as vital to address the shrinking workforce in one of the
world's most rapidly aging societies.
In a meeting with business executives, Abe urged companies to set
targets for promoting female workers to senior jobs and disclose
information on progress in annual earnings reports.
He also said the government would make necessary legal changes to
promote female participation in the workforce in central and local
governments, as well as companies.
"We’d like to act with speed on this," Abe said.
Abe's remarks came one day after a Tokyo assembly member from his
ruling Liberal Democratic Party (LDP) had to apologize for heckling
a female local lawmaker with sexist comments.
Most of the growth measures to be formalized - including a phased-in
corporate tax cut and reform of the world's biggest pension fund -
have been announced already and are likely to receive muted applause
from financial markets and experts, who say the package is a step in
the right direction but want to see how the measures are fleshed out
and implemented.
LONG-TERM PLAN
Private economists surveyed by Reuters forecast that the plan could
boost Japan's potential growth rate by 0.2-1.5 percentage points
from its current level of around 0.5 percent. But they noted that it
would take time.
"Even after the government growth strategy is announced, various
legislation must be enacted and it will take time for companies to
begin to act. Therefore, it will be 10 to 20 years before the
potential growth rate rises," said Kenji Yumoto, vice chairman of
the Japan Research Institute.
Yumoto said it was possible, but very difficult, for Japan to hit
the 2 percent growth level the government says is needed to reduce
its mammoth public debt.
Among the steps outlined so far is a future cut in Japan's effective
corporate tax rate - among the highest in the world - to below 30
percent over the next several years, and a promise to reform the
$1.26 trillion Government Pension Investment Fund in ways likely to
reallocate more money to the stock market.
Abe's reform package is a welcome move for the Bank of Japan, which
has called for bold government to help sustain the current recovery
fueled in part by its massive monetary stimulus.
But many BOJ officials say the key now is implementation and Abe's
commitment to meet words with action, so that companies feel
confident enough to boost investment for the future.
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BOJ Governor Haruhiko Kuroda, a former senior finance ministry
bureaucrat, has also warned against cutting Japan's corporate tax
rate without securing an alternative source of tax revenue, given
the country's massive public debt.
"MORE DART THAN ARROW"
In a nod to that need for balance, the tax plan will seek to offset
the cuts by broadening the tax base.
But tough, key details of many steps are likely to be left to be
worked out later and several bold but politically contentious
proposals were watered down or omitted.
By dribbling out key elements of the package in recent weeks, the
government hopes to avoid the disappointment that led to a sharp
drop in Tokyo share prices when Abe announced the first installment
of his "Third Arrow" last June.
Also included are steps to raise the number of highly skilled
foreign workers and expand a controversial foreign trainee program;
boost productivity through a "robotic revolution"; and target the
healthcare sector for growth.
Early bold proposals on agriculture reform look to have been watered
down due to opposition from the powerful farm lobby, while the
government has gone out of its way to say moves to increase foreign
workers are not an "immigration" policy.
Discussions on easing labor market rigidities to boost productivity
looked set to yield a plan to end paid overtime for workers earning
the equivalent of at least $100,000 per year - only about 4 percent
of the workforce. The touchy question of whether to make it easier
to fire workers is likely to be left for later debate.
"Abe's 'Third Arrow' growth strategy seems to me like a dart not an
arrow," said Naoki Iizuka, an economist at Citigroup Global Markets
Japan. "I hope he will come up with bolder plans ahead."
(Additional reporting by Leika Kihara; Writing by Linda Sieg;
Editing by Alex Richardson)
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