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Japanese Prime Minister Yoshihide Suga makes an announcement on a large screen in Tokyo, 9 September 2021 (Photo: Yoshio Tsunoda/AFLO via Reuters).

Author: Editorial Board, ANU

Japan has entered election season with the ruling Liberal Democratic Party’s (LDP) presidential election on 29 September and the lower house election in late October or November. After succeeding Shinzo Abe less than one year ago, Prime Minister Yoshihide Suga announced on 3 September that he won’t contest the LDP election and will step down at the end of the month. The race for Japan’s next prime minister is wide open.

Suga’s downfall is a reminder that there is no escape from the public’s top priority of effectively handling COVID-19. His government’s pandemic policy has been characterised by missteps and poor communication with the public.

As Rikki Kersten explains in our lead article this week, Suga’s record on COVID-19 got off to a poor start when he… ‘forged ahead with the Go To Travel campaign which provided government subsidies for domestic travel to stimulate economic recovery. He was forced by spikes in infections to temporarily suspend the program on four occasions’.

On vaccines, Kersten explains, the report card for Suga was ‘must try harder’. Procurement ‘was slow and logistical obstacles held up the vaccine rollout’. Japan’s protectionist regulations required a local trial, which involved just 160 people, even though Pfizer had already conducted large-scale trials with tens of thousands of people.

Japan’s rollout eventually accelerated and over 49 per cent of the population are now fully vaccinated. But the public was frustrated as less than a quarter of the population were fully vaccinated when the Olympics began on 23 July and the prevalence of the Delta variant in Tokyo skyrocketed from about 20 per cent of cases in early July to almost 90 per cent in early August. As hospitals reached capacity, the government announced that only COVID-19 patients with … …continue reading

    

Japanese Prime Minister Yoshihide Suga leaves after a news conference at his office in Tokyo, Japan, 9 September 2021 (Photo: Reuters/Kim Kyung-Hoon/Pool).

Author: Rikki Kersten, ANU

In the time of COVID-19, competence in managing the pandemic is a vital criterion for reward or punishment at the polls for democratic leaders. This is politically tricky enough to manage on its own. Add hosting the Olympics during a pandemic and being a transitional leader, and you’re in the unique world of political pain that was the ultimate fate of Japanese Prime Minister Yoshihide Suga.

When Suga failed to gain a popularity boost from the postponed Tokyo Olympics, it not only threw the electoral schedule into sharp relief for the ruling coalition but it also threw Suga under a bus. When his popularity sunk to the political death zone of an approval rating of 27 per cent Suga accepted that the compressed post-Olympic electoral schedule meant that he had to go. On 3 September Suga duly announced that he would not run for the leadership on 29 September, setting the stage for a new prime minister to lead the Liberal Democratic Party (LDP) into Japan’s general election.

How will things be different for Suga’s successor?

The selection of the new LDP leader is hostage to two counterveiling forces. One is the visceral desire on the part of the parliamentary party to ‘save the furniture’ in the pending general election (which is scheduled to be called no later than 21 October). The other is the rising pressure within the party to shift towards generational change. In selecting the next party president and future prime minister, the LDP must try to satisfy both if Japan is to avoid political instability, and a return of ‘revolving door’ prime ministers.

Whoever’s in the hotseat, the management of COVID-19 will be key. Whatever else, Suga’s successor must demonstrate bureaucratic competence in pandemic management in the eyes of a COVID-jaded electorate. This is especially important because …continue reading

    

Fumio Kishida, Japan's ruling Liberal Democratic Party (LDP) lawmaker and former foreign minister, shows his notebook during a news conference as he announces his candidacy for the party's presidential election in Tokyo, Japan, 26 August 2021 (Photo: Reuters/Issei Kato).

Author: Aurelia George Mulgan, UNSW

Following Japanese Prime Minister Yoshihide Suga’s announcement that he will soon step down, one of the frontrunners for Japan’s premiership is Fumio Kishida, a politician who has long been waiting in the wings for the presidency of Japan’s ruling Liberal Democratic Party (LDP). Kishida made his first bid for LDP president and prime minister last year, only to be beaten by Suga.

Kishida ticks all the traditional boxes for holding the two top positions in Japanese politics. He has strong political and policy credentials. He is an LDP faction leader and a hereditary politician with a long political pedigree. Kishida is also a former cabinet minister, holding the position of foreign minister longer than any other Japanese politician in post-war history. He has also demonstrated substantial intra-party policy leadership as chairman of the LDP’s top policymaking body, the Policy Affairs Research Council.

Kishida’s ambitions have been demonstrated by a series of well-organised, widely publicised public policy pronouncements in recent weeks. These have included ‘reforming the LDP’ by removing the ability of those in top positions in the party to wield too much power for too long.

His specific target in this case was LDP Secretary-General and faction leader Toshihiro Nikai, a kingmaker originally appointed by Abe, who has served in the position for the past five years. Abe appointed him against the wishes of the Kishida faction in 2016, expecting Nikai to play an important role in smoothing opposition to policy initiatives coming from the prime minister’s office and blocking generational change in the LDP by denying Kishida.

The Nikai faction is a completely top-down organisation, with Nikai’s orders considered ‘absolute’ amongst its members. The core of Kishida’s political strategy is reportedly to remove Nikai, a polarising figure …continue reading

    

Welcome to the SoraHouse.

We’re cheap.

We’re guessing you already knew that about us. After all, we’re the people who bought the cheapest car in Japan, stayed at the cheapest hotel in Japan, and ate the cheapest pasta bento in Japan…and did it all with smiles on our faces.

So when we decided that we wanted a house, one where we could enjoy the natural beauty and relaxed pace of Japanese countryside living, you’d be right to assume we didn’t want to spend a lot of money on it. But when we found this house in the mountains of Saitama, the prefecture that borders Tokyo to the north, for just one million yen (US$9,100), it was a deal too sweet to pass up, so we bought it!

▼ SoraNews24 founder Yoshio, posing with the SoraHouse

That price may sound too low to be true, and if we’re being completely honest, we didn’t pay actually one million yen for the house…we paid 100,000 yen (US$910) for it. The remaining 900,000 yen was for the land is sits and the other structures on the property, brining the total for everything up to one million yen.

“OK, but at that price, this has got to be just a teeny, tiny shack, right?” you might be thinking. Nope! This is a two-story house with a total of 131 square meters (1,410 square feet) of floor space.

▼ The first floor is set up in a classical Japanese farmhouse style, with groves to put sliding doors/partitions around a central living room

…continue reading

    

Haruhiko Kuroda, governor of the Bank of Japan, and Taro Aso, Japan's deputy prime minister and finance minister, Fukuoka, Japan 9 June 2019 (Photo: Reuters/Kim Kyung-Hoon)

Author: William N Kring, Boston University

As the more lethal and contagious Delta variant of COVID-19 rips across the globe, the prospects of multilateral efforts to combat the virus, tackle the looming global debt crisis and mount a sustainable economic recovery are dim. Nowhere is the insufficiency of the multilateral response more apparent than on the issue of debt relief.

Before the crisis, 46 countries were spending more of their resources on debt service payments than on health care. As the COVID-19 pandemic began to wreak havoc on the global economy, the G20 responded by announcing the Debt Service Suspension Initiative (DSSI) during World Bank and IMF meetings in April 2020. The DSSI allowed low-income countries (LICs) to temporarily suspend their debt payments through to December 2020, a measure that has since been extended through to December 2021.

The DSSI has been criticised for failing to compel all creditors to participate. Of 73 eligible LICs, only 45 beneficiary countries have sought to suspend debt payments to official bilateral creditors. Since only a limited scope of debt service is covered, deferred debt service through July 2021 totalled only US$4.6 billion.

In April 2021, the G20 also developed a ‘Common Framework for Debt Treatment beyond Debt Service Suspension Initiative (DSSI)‘ to facilitate negotiations over debt restructuring for LICs. While the measures adopted by the G20 are unprecedented, only Chad, Ethiopia and Zambia have applied for the framework and restructuring measures have not gone nearly far enough. LICs that apply for the framework are likely to be downgraded, as Ethiopia recently experienced.

Despite these shortcomings, the communique released following the July 2021 …continue reading

    

Panic buying takes hold of Japan once more, only this time it’s for oxygen.

How should we keep safe against the coronavirus? Arguably, the most science-backed method would be to get vaccinated, like our reporters at SoraNews24 have.

But while more and more people here in Japan are receiving their shots, some people are looking for other ways to keep safe, like panic-buying and hoarding. Panic-buying isn’t something new, or even exclusive to Japan — the No Toilet Paper Era is sure to remain in our memories for years to come.

Japan had a pretty big flour shortage last year as well, but while brick and mortar stores were flour-free, a quick glance on Japanese flea market app Mercari saw unscrupulous users offer bags of flour for sale at a significantly higher price than normal.

▼ Enjoy this cake, because the ingredients cost a small fortune.

A year on, flour stock seems to have returned to normal, but Mercari has a new hot ticket item that users are rushing to buy — canned oxygen. Usually used by athletes, mountain climbers, and those who need an oxygen boost after a workout, oxygen cans have been flying off the shelves in shops as COVID-19 cases surge.

Naturally, with any “high demand low supply” item, Mercari users have started rubbing their hands in anticipation of some quick cash grabs. According to retailers Iwatani, a normal can of oxygen sells for about 700 yen (US$6.40), but listings on the site have asked for tens of thousands of yen for them.

The representative of the manufacturer was perplexed, saying, “We have had a surge of inquiries about oxygen canisters this month, and since they are not for medical …continue reading

    

Britain's Defence Secretary Ben Wallace listens to Japan's Prime Minister Yoshihide Suga at the start of their meeting at the prime minister's official residence in Tokyo, Japan, 20 July 2021. (Franck Robichon/Pool via REUTERS)

Author: Ken Kotani, RUSI

When asked about Japan participating in the Five Eyes intelligence-sharing alliance, ex-US and British intelligence officers usually claimed it was difficult because Japan differs in culture and language. This situation has dramatically changed in recent years.

Last year, UK Prime Minister Boris Johnson made positive remarks about Japan joining the alliance. Former US deputy secretary of state Richard Armitage also wrote that ‘the United States and Japan should make serious efforts to move toward a Six Eyes network’. Japanese security scholars Richard Samuels and Brad Williams similarly mentioned the possibility of Japan’s participation in the alliance in their recent studies.

Meanwhile, Japan’s ruling Liberal Democratic Party (LDP) published a December 2020 report, ‘Towards Establishing an Economic Security Strategy’, outlining that Japan ‘should seek to join the Five Eyes alliance’. In view of the recent Chinese maritime expansionism in Southeast Asia, a regional ‘handshake‘ between the Five Eyes and Japan seems inevitable. Yet specific talks have not progressed at all.

After the Second World War, the Japanese government refrained from establishing a robust intelligence community because Japanese public opinion opposed stepping into the dark world of intelligence. At the same time, Japan could depend on US intelligence during an emergency. This prevented the establishment of an overseas intelligence apparatus, like the CIA or MI6, making it difficult for Japan to contribute any HUMIT intelligence to the Western security alliance.

But Japan incrementally increased its defence and security capabilities over the decades and the government now manages seven high-performance reconnaissance information gathering satellites (IGS). The resolution of the latest version launched in 2020 is reported to be less than 30cm, enabling it to identify a human head from outer space. The Japanese government also plans to launch …continue reading

    

University students attend a job fair at Makuhari Messe in Chiba, Japan, 1 March, 2019 (Photo: Naoki Morita/AFLO).

Author: Yuri Okina, Japan Research Institute

The Japanese labour market has undergone significant change since the early 2010s when the baby boomer generation began to retire, expanding opportunities for women, the elderly and other groups. But COVID-19’s economic impact is challenging the gains of the past decade. The employment rate has reversed its upward trend, declining along with salaries and hours worked, while unemployment rose from 2.4 per cent in 2019 to 2.9 per cent in June 2020.

Looking at COVID-19’s impact on the Japanese labour market, there are two key takeaways.

The first is that the increase in unemployment is modest compared to the decline in economic activity. Many non-regular workers — disproportionately women, youth or older workers — who lost their jobs during the first state of emergency in April 2020 chose not to look for new employment and so fell out of the labour force. This partially explains why the unemployment rate remained low.

The Japanese government also expanded the employment adjustment subsidy, which enabled businesses to put workers on temporary leave while keeping them nominally employed. To respond to the sharp decline in consumer demand, companies reduced employees’ overall number of hours. So Japan’s primary method of labour force adjustment to the pandemic was a generalised reduction in working hours.

As of 13 August 2021, the government had approved four million applications for over 4 trillion yen (US$36.3 billion) in subsidies, which blunted the impact of COVID-19 on employment. The subsidies enabled creative work-sharing arrangements where employees from heavy-hit sectors — such as the airline industry — could be temporarily dispatched to work in less-impacted sectors such as retail. Both small- and medium-sized enterprises and larger firms benefitted from these subsidies.

The second major takeaway is that, as in other countries, the impact of COVID-19 in Japan varied …continue reading

    

People wearing masks for protection against the coronavirus walk across a scramble intersection in Tokyo's Shibuya area, 20 August 2021 (Photo: Reuters).

Author: Naohiro Yashiro, Showa Women’s University

In June 2021, Japan’s Council on Economic and Fiscal Policy promoted plans for an optional four-day workweek in its annual economic policy guideline. While the policy creates substantial employment benefits for Japan’s aging workforce, the announcement has divided Japanese workers.

Young workers and couples with small children welcome fewer working hours a week, while middle-aged male workers want to avoid their overtime payments from being reduced by fewer workdays. Employers also worry about increasing hourly wage costs without an equivalent productivity growth. If the plan reduces salaries then it may harm the economy by reducing consumption. The key issue is that the program is optional, meaning that the actual effect will likely be limited.

The rapid development of information and communication technologies risks creating a digital divide among middle-aged workers. The government intends to take a larger role in upskilling Japan’s labour force. Traditionally, Japanese firms depended on skill formation through on-the-job training throughout their workers’ lifetime. This scheme is becoming obsolete due to Japan’s increasing life expectancy — 87.7 years for females and 81.6 years for males in 2020. A growing share of college graduate women and resulting two-earner households are also inconsistent with traditional employment practices that are implicitly based on a working husband and a fulltime housewife arrangement.

The optional four-day workweek plan intends to give equal employment opportunities to people with different work arrangements. A significant barrier for working mothers is taking care of small children, which conflicts with the long working hours of Japanese firms. The optional four-day workweek plan improves the balance between work and life and is therefore helpful for child-rearing and family care responsibilities.

The plan also provides more time for older workers to acquire new skills. To accommodate a <a target=_blank href="https://www.eastasiaforum.org/2015/05/03/japans-race-against-the-ageing-clock/" target="_blank" …continue reading

    

This picture shows the headquarters builsing of Bank of Japan (BOJ) in Tokyo 26 April 2021 (Photo: Yoshio Tsunoda/AFLO/Reuters).

Author: Toshitaka Sekine, Hitotsubashi University

More than eight years have passed since the Bank of Japan (BOJ) began its aggressive Quantitative and Qualitative Monetary Easing (QQE) program in April 2013. Despite subsequent efforts made by the Bank, such as the adoption of negative interest rates in January 2016 and yield curve control in September 2016, it has yet to achieve its 2 per cent inflation target — the most recent figures put consumer price index inflation small negative.

This raises the question of what policy options are left for the BOJ if it needs to further increase monetary stimulus. In these circumstances easy monetary policy would remain important, but the central bank would have limited room to manoeuvre. Other elements of the policy mix (or the three arrows strategy of former prime minister Shinzo Abe) would need to play a major role — namely, fiscal policy and a strategy for economic growth.

Any analysis of Japan’s easy monetary policy must focus on how unconventional monetary policy works. Despite the name, unconventional monetary policy is not so different from the conventional sort. The BOJ can stimulate the economy by lowering the interest rate below what economists call the natural rate of interest, the equilibrium rate that equates saving and investment in the economy. When the interest rate is below this level, saving is discouraged (as returns on deposits are low) and investment is encouraged (as firms can borrow money cheaply).

Under a conventional monetary policy regime, the interest rate being adjusted is the short-term interest rate. Once the central bank cuts this conventional rate to zero, it starts cutting the long-term rate through unconventional means such as forward guidance and quantitative easing.

In fact, all the …continue reading