- YOMIURI EDITORIAL
Support firms actively investing in people to ensure growth, wage hikes
17:59 JST, February 20, 2022
Moves are growing to encourage companies to invest in people. It is hoped that a system will be developed in which much money will go to companies actively making such investments, which will in turn lead to a virtuous cycle of growth and wage hikes.
With the digitization of the economy, the core industrial sector is shifting from manufacturing to IT and other service industries.
As a result, intangible assets such as human resources, patents and copyrights have been considered more important than tangible assets such as real estate and production facilities as corporate evaluation criteria.
In particular, a way of thinking is spreading in which knowledge and ability that foment new ideas are regarded as human capital in which money should be predominantly invested.
In his policy speech, Prime Minister Fumio Kishida, who touts a “new form of capitalism,” said he will at least double the investment in people in the public and private sectors at an early date. In response, the government plans to draw up new guidelines to make it easier for companies to disclose information about their human capital.
The aim of linking investment in people to economic revitalization is reasonable.
Japanese companies’ originally had a particular way of valuing people through management practices such as lifetime employment and ample welfare benefits. However, since the bursting of the bubble economy in the 1990s, Japanese companies have been giving priority to keeping labor costs down, cutting expenses for training and skills development in the workplace.
Wages remain stagnant. Average wages have increased considerably in the United States, major European countries and South Korea over the past 30 years, but not in Japan.
On the other hand, Japanese companies have amassed retained earnings, or accumulated profit, that reached a record high of ¥484 trillion as of the end of March 2021.
It is desirable to ensure that more funds will flow to companies that invest in people appropriately rather than those that have neglected to allocate profits.
If the money is used to raise corporate value and create a virtuous cycle that leads to higher wages, it is beneficial to both employees and shareholders. It is also significant in its effect to invigorate the economy as a whole. It is hoped that the new guidelines will accelerate such moves.
Items subject to disclosure include personnel training, brushing up of skills and employee satisfaction. Companies will likely be asked to disclose the proportion of female and foreign employees and be encouraged to diversify human resources more.
In addition, it is worth considering assessing whether companies are appropriately raising wages commensurate with their profits.
Around the world, calls have been made to shift from excessive shareholder capitalism, which focuses only on payouts to shareholders, to management that gives consideration to a wide range of stakeholders, including employees and business partners. It is hoped that the guidelines will be made viable to ensure this shift takes root.
— The original Japanese article appeared in The Yomiuri Shimbun on Feb. 20, 2022.
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