Annex 1.B. Progress in structural reform

Raise the minimum wage toward half of the median wage and reduce the amount of unpaid overtime by firms.

The weighted mean of the regional minimum wage in 2018 increased by 3.1%. In 2017, the Labour Standard Inspection Office rectified unpaid overtime by 1 870 firms, resulting in the payment of JPY 446 billion of unpaid overtime to 205 235 workers.

Make greater use of the Guidelines for Personal Guarantees Provided by Business Owners to expedite out-of-court settlements for failed SMEs.

The number of cases settled using the Guidelines increased from 236 in FY 2016 to 298 in FY 2017 for private financial institutions and from 135 to 162 for public financial institutions.

Promote entrepreneurship by enhancing the availability of education, training and financing, particularly for women

The Japan Finance Corporation will apply preferential interest rates to loans to women and to people under the age of 35 or aged 55 or older, who have started a business within the past seven years or so.

Scale back commodity-specific agricultural subsidies and promote farm consolidation to lower production costs and strengthen market forces in the farming sector.

Production quotas for table rice were abolished in FY 2018 to enable farmers to produce rice in response to demand without relying on government quotas. The Act on Promotion of Improvement of Agricultural Management Foundation was amended in May 2018 to facilitate the renting of farmland to Farmland Banks by those who inherit farms. 　

Continue to pursue regional and bilateral free trade agreements.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force at the end of 2018. The Japan-EU EPA entered into force in February 2019. Japan is working toward the steady implementation of both agreements and the expansion of CPTPP. Japan is also participating in RCEP negotiations.

Focus SME support on overcoming market failures that limit private financing rather than supporting mature firms.

Firms over ten years old received only 3% of public credit guarantees for their loans in FY 2017.

Encourage FDI inflows by addressing problems in the M&A market, corporate governance, regulation and employment flexibility.

The Working Group for Revising Regulations and Administrative Procedures under the Council for Promotion of Foreign Direct Investment in Japan completed its final report on the simplification of regulations and administrative procedures related to foreign companies’ investments in Japan in April 2017. To promote corporate governance reform, the Stewardship Code and Corporate Governance Code were revised in 2017 and 2018, respectively.

Focus regulatory reform on administrative burdens on start-ups and regulatory protection of incumbents to encourage firm creation.

No action taken since the 2017 Survey.

Expand the use of ICT in education to prepare for the digital revolution.

Programming education will be compulsory in schools from FY 2020. The government is promoting the proactive use of ICT devices in educational activities.

Use the new guidelines in labour laws to reduce discrimination against non-regular workers.

Guidelines for equal or balanced treatments between regular and non-regular workers were announced in December 2018.

Improve the fiscal framework.

The Committee for Promoting the Integrated Economic and Fiscal Reforms under the Council on Economic and Fiscal Policy manages fiscal reforms using a Plan, Do, Check, Action cycle. A new timetable for expenditure reform was set out in 2018 based on "the New Plan to Advance Economic and Fiscal Revitalisation."

Scale back transfers from the working-age population to the elderly by raising co-payments and the ceilings on total co-payments for the elderly for health and long-term care, while taking account of equity implications.

For medical insurance, the review of High-Cost Medical Expense Benefit for those above age 70 was held in 2017 and 2018, from the perspective of inter-generational and intra-generational equality. Exceptions on the insurance premium reduction for those above 75 years old has been reviewed since 2017.

Expand the coverage of the Basic Livelihood Protection Programme, while reforming it to encourage work.

The government aims to increase the share of public assistance recipients who participate in the employment support programmes and who later move to work or receive income increased from 43.6% in December 2017 to above 50%.

Require local governments to pursue fiscal consolidation in tandem with the central government by reducing transfers from central to local governments and imposing spending rules.

Transfers from central to local governments remained on a downward trend in FY 2018. The issuance of bonds by local governments to address shortages of their general revenue will fall by 18% in FY 2019, continuing the downward trend in the amount of local government debt.

Enhance incentives for school consolidation to adjust to the falling number of children.

The government is providing information to each board of education on how to decide whether to consolidate their schools, including information regarding the effect of school consolidation on students and schools.

Focus increases in childcare capacity on urban areas facing shortages, in part by facilitating greater entry by private firms.

The government is promoting the building of small-sized childcare service centres and arranging the venues. This helped to reduce the number of children on waiting lists by 6 000 in 2018 relative to 2017, with half of the decline in Tokyo prefecture. The number of childcare centres built by private firms is rising.

Lower public investment by carefully reducing public infrastructure in line with demographic changes and concentrating new investment on projects with the highest returns.

The government is encouraging each local government to develop maintenance plans for individual public facilities by FY 2020 and to revise their master plans for public facility management by FY 2021. Each year, the central government monitors the progress of the local government plans, including in consolidating infrastructure.

Maintain the financial viability of local public corporations through consolidation, expansion of business areas and increased user fees.

The government is encouraging each local public entity to prepare a management strategy and to make various management reforms, such as expanding their business areas and utilising private-sector vitality. The management strategy was developed for 47.9% of public enterprises by FY 2017, and is to cover 95% by FY 2020.

Raise taxes on capital income to increase the effective tax rate on high-income earners.

No action taken since the 2017 Survey.

Increase the coverage of firm-based social insurance and ensure better compliance with the public pension schemes.

Since April 2017, part-time workers in enterprises with fewer than 500 employees can be covered by Employees’ Pensions Insurance based on agreements between employers and employees.