Japan Press Weekly

Tweet

2010 April 14 - 20 [ECONOMY]

Keidanren ‘growth strategy’ will deprive even large corporations of their future - Akahata editorial

JBF President Mitarai Fujio stated, “Without revitalizing business activities, it will be impossible to create jobs or better living conditions for people.” The strategy stresses above all else the need to strengthen international competitiveness.

To achieve this end, the strategy demands that the national and local corporate income tax rates be reduced by 10 percent, that the government further relax the regulations on working hours and labor standards, and that the minimum wage be maintained at the present level. It calls for these steps to be funded by a substantial increase in the consumption tax rate while opposing an increase in the corporate share of burden for premiums for social services and an increase in the maximum rate of income tax.

‘International competitiveness’ used as camouflage

A Health, Welfare and Labor Ministry survey shows that workers’ basic wages have continued to decline for 18 months in a row. An increasing number of large corporations in the manufacturing industry are improving their business performances. In contrast, more people are experiencing hardships.

The JBF self-centered “growth strategy” will impose on the general public the severe burden of an increased consumption tax in order for large corporations to benefit further. Does Nippon Keidanren think that the use of the term “international competitiveness” will let them get away with anything?

Japan’s big businesses are not the only one to suffer from severe international competition. Large corporations in Europe are competing with each other while they are paying taxes and social services premiums which are 20-30 percent higher than those for their Japanese counterparts and allowing shorter working hours than in Japan. The minimum hourly wage exceeds 1,000 yen in Europe.

National and local corporate income tax rates in Japan appear to be high when you look at the numbers. However, in international comparison, generous tax breaks, for example to business R&D projects, effectively reduce the rate of corporate taxes Japanese large corporations pay.

Financial Ministry data show that the payment of corporate taxes in the car industry in Japan is about the same as that in the United States and is lower than that in Germany. In the information service industry, Japanese corporations pay lower taxes than the United States and Germany.

The thing to note is that large corporations have rapidly increased their internal reserves from 142 trillion yen to 229 trillion yen in the last 10 years. Why should tax rates be reduced when their after-tax profits have been amassed to such an enormous extent?

It is true that large corporations in Japan are facing big problems. They have been severely hit by the rupture of the U.S. consumption bubble and are now suffering from sluggish domestic demand, though their performances are somewhat improving with the help of government economic measures. Well-known carmaker Toyota Motor and some other corporations have been hit with recalls of defective products.

Toyota’s defective vehicles, however, are a sign of its irresponsible labor policy of replacing regular employees with “disposable” temporary workers and of reducing unit prices to be paid to their subcontractors. Their insatiable greed through cost-cutting measures has made domestic demand fall off, which in turn has made it more dependent on the U.S. market. That is why the Japanese market was severely affected by the U.S. economic crisis. The defective cars, at the same time, are the consequence of their disregard for safety by utilizing unsound cost-cutting measures in order to increase their own profits.

Is this what all businesses call for?

As long as large corporations persist in making profits at the expense of its workers and affiliated small businesses owners, though they are the very foundation of the Japanese manufacturing technologies, their future is bleak. Yet, Keidanren’s “growth strategy” sets forward its self-centered demands without any self-criticism of the negative effects of their policies.

If Nippon Keidanren proposes this strategy as a consensus of the business circles, the future for Big Business in Japan is in danger of collapse.
- Akahata, April 15, 2010