Bloomberg News

Japan’s Abe Opens Diet Session With Vow to Deliver Higher Wages

October 15, 2013

Prime Minister Shinzo Abe pledged to create a virtuous circle of higher employment and spending and to boost Japan’s role in global security, while giving few details on measures to spur investment and competitiveness.

Abe’s speech at the opening of the Japanese parliament marks the start of what he has dubbed the “session for getting things done,” after his ruling coalition won the July upper house election, ridding him of the handicap of a hung parliament. The session runs to Dec. 6.

Abe said he aimed to boost employment and raise wages, creating a “virtuous circle” that spurs consumption and investment, according to a copy of his speech distributed to reporters in advance. He would deepen links between politics, labor and capital in a bid to realize this goal, he said.

Speaking to lawmakers in Tokyo, Abe said the effects of the first two of his “three arrows” of economic policy -- monetary easing and fiscal stimulus -- had yet to reach some parts of the country. “The escape from deflation is only part-way along,” he said. “We must continue along this path.”

Ending Deflation

Japan’s economy grew an annualized 3.8 percent in the second quarter and Abe’s bid to end two decades of stagnation and deflation have led the Topix index to gain 40 percent this year, making Japan the world’s best-performing major stock market. To sustain the recovery, Abe should seek to boost competitiveness by cutting corporate taxes, revamping rigid labor markets and restraining social spending, economists including Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities Co., have said.

In the new legislative session, the government plans to present a bill on improving industrial competitiveness intended to support mergers and new ventures, along with a separate law relaxing regulations in special economic zones. A bill on restructuring the electrical power industry, which was abandoned during the last parliamentary session, is also set for discussion.

“There have been many similar growth strategies in the past,” Abe told lawmakers. “The difference is whether it is carried through or not.”

Pacifist Constitution

On national security, Abe said Japan should be proud of its 68 years as a nation of peace. “We must take action now to ensure that we can defend that peace in the future,” he said. He reiterated he would create a National Security Council to strengthen the command function of the prime minister’s office in defense and foreign policy.

Abe added that he aimed to deepen public debate on modifying Japan’s pacifist constitution, without mentioning plans he has previously discussed for changing its interpretation to allow Japan to defend its allies. Abe’s coalition partner, the Buddhist-backed New Komeito, has not backed the idea.

Abe said the government would take the lead in dealing with the crisis over contaminated water leaks from the crippled Fukushima nuclear plant, rather than leaving the task up to Tokyo Electric Power Co. (9501), the company that operated the site.

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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