JAPAN

How Business Circles Seek To Influence Politics

IN Japan, the business circles are trying hard to forge a two-party system that would enable them to control politics more effectively by doling out money to two major political formations. At present, they are publicly calling for an increase in consumption tax and an adverse revision of the constitution.

HYPERACTIVE CORPORATES

An example is the Japan Business Federation (JBF or Nippon Keidanren), the headquarters of Japan’s business establishment, that came into being in May 2002 through a merger between the Japan Federation of Economic Organisations (Keidanren) and the Japan Federation of Employers Associations (Nikkeiren). As on May 31 this year, the JBF membership was 1,584, composed of 1,268 companies, 126 industrial associations, and 47 regional employers association.  

In its May 2002 inaugural convention, the JBF declared active involvement in various issues affecting corporate activities, including economic, industrial, social and labour affairs, and expressed willingness to increase its role in the policy-making process.

The JBF is run by 26 corporate executives. About 50 panels set up in its secretariat annually prepare about 50 JBF policy proposals that are submitted to the government.

The JBF chairman Okuda Hiroshi (Toyota Motor Corporation chairman) is a member of the Council on Economic and Fiscal Policy, the prime minister’s advisory body. He has used its meetings to present the corporate agenda to the prime minister.

While the JBF seeks to hammer out differences among corporations, the Association of Corporate Executives (ACE or Keizai Doyukai) allows its members to speak freely without regard for the interests of specific firms or the category of business they represent. The ACE, currently chaired by IBM Japan chairman Kitashiro Kakutaro, was founded in 1946 and has about 1,400 members. It has produced many “talents” for economic organisations under the government. The Bank of Japan’s governor Fukui Toshihiko, for example, was once the ACE’s vice chairman.

The JBF, which publicly calls for an increase in the consumption tax rate up to 18 per cent, played a significant role in increasing the rate to the present 5 per cent from the initial 3 per cent. This business organisation also wants cuts in corporate tax and reduction in the employers’ share of burden for the premiums for social services. In 1999, the Industrial Revitalisation Law was enacted in accordance with what the JBF wanted. The measures included a cut of 9,00,000 yen in corporate tax for companies as a reward for every worker’s dismissal.

Recently, the JBF announced that it would restart donating money to political parties according to their willingness to cooperate with the JBF policies. This was a flagrant intention of buying politics.

In January 2003, JBF chairman Okuda called on opposition parties to “move toward acquiring capabilities to assume political power instead of maintaining their position as opposition parties, with a view to establishing a two-party system.”

The ACE, too, had called for constitutional revision and for elimination of the proportional representation system in the House of Representatives elections. On November 9, the ACE had also urged that prime minister Koizumi Junichiro swiftly effect “pension reforms,” privatisation of the postal services, and other such measures. ACE chairman Kitashiro Kakutaro also urged the prime minister to dramatically accelerate the “reforms.” However, the JBF found these demands too delicate to take up.

CORPORATE EYES SET ON DPJ

During his campaign speech in Tokyo on November 3, Fuwa Tetsuzo, chairman of the Japanese Communist Party (JCP), urged the citizens to use their ballot to “frustrate the business circles’ attempts to pave the way for government to be dominated by such political parties as are in favour of a consumption tax increase and of an adverse revision of the constitution.”

On November 10, JBF chairman Okuda Hiroshi welcomed the results of the general elections as a sign of the arrival of a two-party system. He said, “I have been looking forward to such a system as is in place in the United States, in order to run the country smoothly.”

He also demanded that the coalition government, led by the Liberal Democratic Party (LDP), speed up the “reforms,” and said that the JBF seeks policy discussions at all levels with the Democratic Party of Japan (DPJ). It will be noted that the JCP, which has made significant gains in the latest elections, is currently the centre of attention of the business circles. The latter hope that the JCP, which received large chunks of corporate money, will be able to provide the second plank of the envisaged two-party system in the country, in addition to the LDP and allies. 

PEOPLE DOUBT ‘BRIGHT SIGNS’  

In the meantime, people have started voicing doubts about the LDP prime minister Koizumi Junichiro’s contention that at long last “bright signs” are appearing in the economy. The Liberal Democratic Party and Komei Party, a ruling coalition partner, are boastful of the “economic recovery under way” --- as if it were their feat. There are also economists who say it is not realistic to deny that economic recovery is under way.

This view is far removed from what a majority of people feel every day. Many have openly said that throughout Japan the economy in no position to be described as the beginning of an economic upturn.

For example, the Bank of Japan’s quarterly business survey, published in September, covering many large as well as small and medium size businesses, showed there are no bright signs at all for these businesses.

It is a fact that, among the large manufacturing corporations, the difference in the number of those who perceive business as good and those who perceive it as bad turned positive for the first time after two years and 9 months. Yet, among the small and medium size businesses, both in manufacturing and non-manufacturing sectors, those who see business as bad greatly outnumber those who see business as good, although the difference is smaller than that in the previous survey published in June. Thus what can be said at the most is that these businesses are struggling, barely keeping their heads above water.

In fact, large corporations in manufacturing industries feel an economic recovery only because the leading exporters are gaining from exports to the United States and Asia.

What is more, large corporations have changed their structure into one that can secure profits even without an increase in sales. This is accomplished through corporate restructuring in which costs for personnel and machine parts are reduced to the minimum. Many auto makers thus expect a big increase in their profits.

In contrast, personal consumption of the working households remains low despite the recovery for big businesses. Business for subcontractors and small firms is almost at a standstill. This imbalance creates a vicious circle that prevents the economy from achieving a real recovery. In other words, the recovery felt by large corporations did not stimulate domestic demand to lead the whole economy onto a sustainable recovery course.

Even the government’s Economic and Fiscal White Paper for fiscal 2003 says sustainable economic recovery cannot be expected without an increase in personal consumption. The key to real economic recovery is whether economic policy is aimed at boosting the household consumption. That is why the JCP has been calling for a drastic change in polities --- away from supporting large corporations to one of raising people’s living standards.

PROFIT THROUGH RESTRUCTURING

As an example of the nature of the claimed recovery, on November 5, the Toyota Motor Corporation announced that the group’s consolidated earnings (including those of overseas affiliates) registered a record 12.1 per cent increase in operating profits during the April-September period this year.

Toyota is a textbook example of large corporations that have been increasing their profits during the last three years, under the Koizumi regime, through cost cutting corporate restructuring schemes.

About 930 firms listed in the First Section of the Tokyo Stock Exchange saved a total of 4.5 trillion yen (about 42 billion dollars) through slashing 3,06,000 jobs in three years up to 2003. On the other hand, a Tax Administration Agency survey shows that the average income of workers in 2002 decreased by 2,44,500 yen (2,243 dollars) in the last three years.

Large corporations have thus achieved their gains with enormous cuts in personnel costs. In companies capitalised at 100 million yen (91,743 dollars) and over, labour cost in 2002 was reduced by 2.4 trillion yen (22 billion dollars) compared to 1999. Further job cuts have been announced, including 20,000 jobs at Sony, 4,000 at Resona Bank and 2,800 at Kanebo.

Two bills that will adversely change working conditions, including employment contracts, have been enacted by a majority because of untold cooperation between the ruling Liberal Democratic Party and the opposition Democratic Party of Japan. As a result of the adverse revision of the Industrial Revitalisation Law, 217 companies have reduced their workforce by 90,000 and have been awarded tax breaks amounting to 81 billion ten (743 million dollars). The adversely revised Labour Standards Law will increase low-paying jobs and overtime work without pay.

Naturally, as large corporations are pushing ahead with this cost cutting strategy, the struggle to stop such outrageous corporate practices and establish an economy governed by rules is becoming a major political issue.

The JCP has been demanding that large corporations must fulfil their social responsibility for increasing stable jobs, particularly for youth. The party wants a stop to unjustified dismissals, regulation of workers’ transfers and early retirement, protection of the rights of part-time and other contingent workers, and elimination of long work hours and unpaid overtime work.