 |
 |
| 'THE SHAPE OF JAPAN IN THE 21st CENTURY' SERIES, No. 24 CREATING JOBS AND INCUBATING NEW SERVICE INDUSTRIES THROUGH THE SPECIAL ZONES LAW |
| A survey of the economic policies for revitalizing
Japan issued by the Koizumi Cabinet to date, beginning with 'Reform
and Perspectives - FY2002', shows that they can be virtually condensed
into two aims and one method. The two aims are the creation of jobs
and the incubation from amongst SMEs of the high added value industries
that will undergird Japan in the 21st century. The method is the Law
on Special Zones for Structural Reform. |
|
| 1. | Job Creation Policies |
(1)The Current Unemployment Situation Neo-classicist economists presuppose total employment. They assume that for the 4 million unemployed there are 4 million positions vacant within industry. The unemployed have, for the most part, simply failed to match with the vacancies. The Ministry of Health, Labor and Welfare's 'Hello Work' job introduction system is close to this employment mismatch theory. However, the reality is different. The unemployed of today have come from structural recession. The careers cultivated by middle-aged unemployed with 20~30 years in the construction or manufacturing industries are useful for changing jobs or re-entering employment in the same industry. However, as the construction and manufacturing industries are in recession, with vacancies tending to decline, it is difficult to find employment in the same kind of industry and the employment of one worker may mean the termination of another. This signifies that the unemployed who originate in structural recession must find work in fields in which their careers to date do not stand them in good stead. The disadvantages for middle aged and older workers compared to those who are younger are partly caused by the fact that their salaries are high but are mainly due to their past careers actually counting against them. Against this, the poor job market for younger workers is due to the fact that for the past 40 years universities have not developed courses of study in tune with the development of industry, so that skills learned at university do not assist in increasing industry productivity. (2)Appropriate Measures to Assist the Unemployed - Training for the Creation of High Added Value Industries The measures for securing employment for middle-aged and older workers amidst structural recession are firstly, to carry out thorough career counseling to discern what kind of industries and occupations these workers hope to enter in their second and third careers. Secondly, we must survey industries seeking workers to extract the occupational skills and necessary aptitudes they require. Thirdly, we must train middle-aged and older workers so they can meet these requirements. However, at the current time there is no career counseling system with these aims and no occupational training targeted at middle-aged and older workers. It seems as if the current system is predicated on high economic growth and secondary industries. Under the Japanese Constitution, whether an unemployed person secures a job is a matter belonging to the basic right to freedom of occupation and there is no prima facie right or authority in the state, local government or private entities to interfere. Accordingly, it is inevitable that the support of the state, local government or private entities for career changes for middle-aged and older workers will involve ineffective policies and programs. After the war Japan's economic policy was effectively 'socialist economics' and industrial policy was 'government economic initiatives'. As far as their own inconvenience went, the Japanese people felt that the state and local government were responsible for the situation and that it went without saying that these governments should formulate measures to deal with it; the people gave them their trust. This tendency should obviously be eradicated from the perspective of self-determination and taking personal responsibility. However, my view is that the current situation is that there is no policy that will halt the complete unemployment of this gradually swelling group other than the swift and large-scale implementation of occupational training for middle-aged and older workers by the state and local government. Further, carrying out occupational training for the unemployed so that they can find work in different occupations centering on tertiary industries will open the way to realizing increased labor productivity and the acquisition of skills that will produce new added value. If we focus on this point then the rapid incubation of tertiary industries that have high added value industries at their core should be the path targeted by Japan's industrial policy, in other words, the government's new growth industry incubation policy. This is what I will turn to next. |
|
| 2. | Incubation Policies for SMEs and Service Industries |
|
Japan's postwar industrial policy was successful in transitioning from primary to secondary industries but mistimed the transition to tertiary industries. The heavy construction and export industry policies implemented primarily by the then Ministry of International Trade and Industry from the 1950's to the 1960's are an example of successful Japanese industry incubation policies. That success brought about the Japanese trade surplus and export-led economic development that remain to this day. From the 1980's America strove to transition to tertiary industries, in particular intellectually creative industries (from hard industries to soft industries) and the success of that change undergirds America today. In comparison Japan frittered its labor and capital away on zero sum gain land and share investments under the bubble economy in the 1980's and was unable to make the transition to intellectually creative industries, having forgotten to improve the productivity of labor and capital in its main industries. With post Cold War global capitalism also having an effect it is arguable that the past 20 years have, with the exception of some export industries, been 'The Lost 20 Years'. (2)The Incubation of High Added Value and Intellectually Creative Industries The aim of the Koizumi Cabinet Emergency Economic Policies is to incubate products arising from Japan's unique industrial structure, in other words the production of intellectually creative and high added value products. The first policy that will prepare the infrastructure for the founding of industries that will give birth to added value is: Urban remodeling is to be implemented rapidly and boldly under the Urban Renaissance Special Measures Law, centering on Tokyo and Osaka. This means that face-to-face activities will be supported through accumulating super-elite firms achieving the creation of intellectually creative and high added value products and we will strive to expand 'accumulation gains' (*1) and construct numerous elite apartment housing in city centers as dwellings for the workers who will shoulder those gains. The second policy is the '300% improvement in labor productivity strategy' in service industries. In practical terms this is the expanded utilization of qualified workers. If qualified workers are gathered together in a city and the production of intellectually creative products is carried out through face-to-face interaction, productivity will rise exponentially. Social science related qualifications bring their power into full play in the improvement of productivity in the indirect, administrative and service sectors. These qualifications presuppose independent business start-ups. Even should a salaried employee inside a business obtain these qualifications it is usual for them to leave that business. From now on we have to put this specialized ability to full use within businesses and increase the productivity of operations. In particular, in order to develop service industries it is necessary for employees in the workplace to take on specialist business roles. To illustrate, an employee who has Level 2 Bookkeeping qualifications would have three times the productivity of an employee who does not. It is considered that an employee qualified as a Social Insurance and Labor Agent will, in relation to personnel and labor applications, have more than three times the productivity of the an employee who is not qualified. The same is all the more true in the case of in-house lawyers and patent attorneys. From my own experience where a large number of workers with qualifications are employed within a business productivity increases by at least 20%. The reason that Japanese manufacturing industry labor productivity is rising in a relatively bullish manner compared to various foreign countries is, I think, due to automation and efficiency gains from robots and computers used in production processes. (*2) The factors equating to efficiency gains in service industry production processes are qualification skills, which are the specialization and systemization of science. If we consider the contribution that qualified workers make to increased labor productivity we surely must increasingly expand and improve our qualified workers in quality and quantity. Moreover, the third policy is the 'Qualified Worker Employment Point System' within business. Point are awarded where a business has employed a worker holding a qualification, 1 point for a Social Insurance and Labor Agent, 1 point for a Level 2 Bookkeeper and so on. The state or local government provides a subsidy of perhaps 100,000 yen per point. The aim is a policy to promote increased labor productivity in the service industry. As the incubation of tertiary industries is national policy it is obvious that it should be supported financially. Fourthly, where an employee has expended monies for training in order to gain a qualification for self-education, tax reforms should recognize this as a deductible expense under the income tax system and further tax law reforms should be carried out so that research area, library, personal computer and similar expenses are broadly recognized as deductible. Self-education is, from the perspective of policy to change the industrial structure and incubate service industries, aimed at increasing labor productivity. We should create incentives for the activities of workers who contribute to increased labor productivity. |
|
| 3. | A Vision for the Future Based on the Special Zones Law |
|
|
|
| 4. | Where is Our Entrepreneurial Spirit? |
The state and local government policy backup I have mentioned above is similar to the proverb 'You can lead a horse to water but you can't make it drink'. No matter how many inviting roads to the waterhole one prepares, they are useless if the horse does not want to go. Even if you lead the horse to the water, if the horse does not want to drink the objective cannot be attained. In any civilization it is the nature and aspirations of the people that have the final say. This being the case, from where does the entrepreneurial spirit come? It goes without saying that it comes from the Japanese people's traditions and patriotism. This kind of spirit should be breathing at a DNA level in the hearts of the Japanese people, who built a top-ranked economic power from the burnt fields of postwar Japan. It is a superficial argument to blame education alone. We are wanting in Japan in general in natural respect for entrepreneurs. However it is none other but entrepreneurs who formed the foundation of Japan's current prosperity and this will also be the same in the future. A future where the top occupational choice for young people is to become a public servant is dark. If the following four points, (1) A tax system that penalizes those who succeed in business with high income and succession taxes,(2) the perception that business is a dirty profession compared to the production of steel, coal or rice and so on,(3) the demonization of entrepreneurialism and (4) the tendency to see service industries and the like in particular as dishonest, vulgar work, are left unchanged permanently then, it will no doubt be inconsistent, feeble and utterly impossible to think that the lifestyle of our people ranked against other countries can be maintained by Japan as a 21st century intellectual property nation. * 1 Policy Proposal, Home Page of Mr. Tatsuo Hatta * 2 Ministry of Health, Labor and Welfare Paper: Heisei 14 Nen Ban Rodo Keizai no Bunseki - Saikin no Koyo / Shitsugyo no Doko to Sono Haikei wAnalysis of the Labor Economy (2002 - Recent Trends and Factors Affecting Employment and UnemploymentiJuly 2002) |
|
|
