New Keidanren Chairman: Selection from Financial Circle Reflects Changing Times

Editorial

14:59 JST, December 21, 2024

It has long been argued that the presence of Keidanren (Japan Business Federation) has been declining. How can the federation improve its ability to send out messages and contribute to the growth of the Japanese economy? The responsibility placed on the leader of the business community is heavy.

Keidanren has decided to appoint Yoshinobu Tsutsui, the chairman of Nippon Life Insurance Co., as its new chairman. Most previous chairs have been from the manufacturing industry. Tsutsui will be the first Keidanren chief from a financial institution. He is expected to officially take up the post at the organization’s ordinary general meeting in May next year.

Nippon Life is a leading institutional investor in Japan and, as a shareholder, is in a position to check the management of many companies. Tsutsui has a deep knowledge of what corporate management should be like. His expertise on tax and fiscal policy, the social security system and the decarbonization field is also likely to have been a reason behind his selection as the head of Keidanren.

Tsutsui should utilize the insight gained through his experience to strengthen the messages sent out by Keidanren.

There had been an unwritten rule that Keidanren’s chairman should be selected from the manufacturing industry. This is because it has been thought that experience in the manufacturing industry, where there are many business partners and the societal influence is great, is essential for bringing together the business world through coordinating various interests.

For this reason, presidents of such companies as Toyota Motor Corp., Hitachi, Ltd. and Nippon Steel Corp.’s predecessor have previously been appointed as Keidanren chairmen.

It is a reflection of the changing issues facing the Japanese economy that the Keidanren chairman has been selected from the financial industry for the first time.

The manufacturing industry, as represented by the auto manufacturing sector, remains the core of the Japanese economy. However, the importance of nonmanufacturing industries such as information technology and entertainment is increasing, and the structural reform of the economy is becoming a challenge.

It is also important to make the transition from a cost-cutting economy, in which cuts to labor and other costs allow products to be sold at low prices, to a growth-oriented economy, in which both wages and investment are increased. It is also necessary to channel personal assets, which are concentrated in savings, into investments and consumption, to develop both the stock market and the economy as a whole.

Tsutsui is required to play a role in making proposals to overcome these issues. It is also important for him to take the lead in realizing wage increases during the shunto spring labor-management negotiations.

Self-reforms by large companies that are members of Keidanren should also be questioned.

Corporate retained earnings exceeded ¥600 trillion in fiscal 2023, marking a record high for a 12th consecutive year. Such companies have failed to actively make investments or raise wages and are not fulfilling their role as the driving force of the Japanese economy. Under such circumstances, Keidanren’s message of calling for reform will lack persuasiveness.

One of the main reasons that Japan’s nominal gross domestic product fell behind Germany’s in 2023, to fourth in the world, was the decline in the competitiveness of Japanese companies. Further efforts must be made to raise the international presence of the Japanese economy.

(From The Yomiuri Shimbun, Dec. 21, 2024)