March 6. 2019 ank of japa Economic Activity, Prices, and monetary Policy in Japan Speech at a Meeting with Business Leaders in Yamanashi Yutaka harada Member of the policy board ( English translation based on the Japanese original)
Yutaka Harada Member of the Policy Board Economic Activity, Prices, and Monetary Policy in Japan Speech at a Meeting with Business Leaders in Yamanashi Bank of Japan M a r c h 6 , 2 0 1 9 (English translation based on the Japanese original)
Introduction Thank you for giving me this opportunity to exchange views with you and for having taken the time to be here despite your busy schedules. It is indeed a great honor to be here today Please allow me to express my gratitude for your great cooperation with the business operations of the Bank of Japan, particularly of the Kofu Branch The Bank introduced quantitative and qualitative monetary easing- or QQE for short--in April 2013 with the aim of achieving the inflation target of 2 percent, and since then has strengthened the QQE framework Today, I first would like to explain the achievements thus far of the Banks monetary easing neasures, excluding those regarding prices, and then describe recent developments in the economy and prices L. The Achievements of Monetary Easing Improvements in Employment The first thing that should be mentioned as an achievement of monetary policy is the improvement in employment. Chart I shows the number of regular and non-regular employees. As can be seen, at the start of QQe, it was primarily non-regular employment that increased. However, since around the beginning of 2015, regular employment also has expanded. Moreover, the share of non-regular employees(non-regular employees divided by all employees excluding executives), which had been rising, also has leveled off. I Regarding how monetary easing lifts productivity, see Yutaka Harada, "Economic Activity, Prices and Monetary Policy in Japan: Speech at a Meeting with Business Leaders in Ishikawa, Bank of Japan, July 2018
1 Introduction Thank you for giving me this opportunity to exchange views with you and for having taken the time to be here despite your busy schedules. It is indeed a great honor to be here today. Please allow me to express my gratitude for your great cooperation with the business operations of the Bank of Japan, particularly of the Kofu Branch. The Bank introduced quantitative and qualitative monetary easing -- or QQE for short -- in April 2013 with the aim of achieving the inflation target of 2 percent, and since then has strengthened the QQE framework. Today, I first would like to explain the achievements thus far of the Bank's monetary easing measures, excluding those regarding prices, and then describe recent developments in the economy and prices. I. The Achievements of Monetary Easing Improvements in Employment The first thing that should be mentioned as an achievement of monetary policy is the improvement in employment.1 Chart 1 shows the number of regular and non-regular employees. As can be seen, at the start of QQE, it was primarily non-regular employment that increased. However, since around the beginning of 2015, regular employment also has expanded. Moreover, the share of non-regular employees (non-regular employees divided by all employees excluding executives), which had been rising, also has leveled off. 1 Regarding how monetary easing lifts productivity, see Yutaka Harada, "Economic Activity, Prices, and Monetary Policy in Japan: Speech at a Meeting with Business Leaders in Ishikawa," Bank of Japan, July 2018
Chart 1 Employment Introduction of QQE Before QQE After QQE Regular employees +1.1% Non-regular employees +1.5%(annualized)+2.4% 10 实图8S甚8器8 Number of regular employees( both sexes) +Number of non-regular employees(both sexes) Rate of non-regular employees(both sexes, right scale) Note: Regular employees and non-regular employees exclude executives of companies and corporations. The figures for"Before QQE"and"After QQE"show the annualized growth rates of employees from 2008/Q1 to 2013/Q1 and those from 2013/Q1 to 2018/Q4 ource: Ministry of Internal Affairs and Communications, "Labour Force Survey Improvements in Employment of women and the elderly Chart 2 shows that the employment of both women and the elderly ( those aged 65 years and over)has been growing. Nevertheless, despite women's entry into the labor market, most women work part-time, and I am well aware of the criticism that there are few women in top positions in Japan. According to the World Economic Forum's Global Gender Gap Index(2018), which measures the degree of gender equality, Japan ranks only 1 loth among 149 countries. However, some progress is being made. As can be seen in Chart 2, the number of women in regular employment has been increasing. Moreover, the proportion of women who are non-regular employees, which had been rising, has remained flat since the start of QQE. This means that the number of women gaining experience at work and
2 Improvements in Employment of Women and the Elderly Chart 2 shows that the employment of both women and the elderly (those aged 65 years and over) has been growing. Nevertheless, despite women's entry into the labor market, most women work part-time, and I am well aware of the criticism that there are few women in top positions in Japan. According to the World Economic Forum's Global Gender Gap Index (2018), which measures the degree of gender equality, Japan ranks only 110th among 149 countries. However, some progress is being made. As can be seen in Chart 2, the number of women in regular employment has been increasing. Moreover, the proportion of women who are non-regular employees, which had been rising, has remained flat since the start of QQE. This means that the number of women gaining experience at work and 0 5 10 15 20 25 30 35 40 45 0 5 10 15 20 25 30 35 40 45 Feb. 1984 Feb. 86 Feb. 88 Feb. 90 Feb. 92 Feb. 94 Feb. 96 Feb. 98 Aug. 99 Aug. 2000 Aug. 01 02/Q2 02/Q4 03/Q2 03/Q4 04/Q2 04/Q4 05/Q2 05/Q4 06/Q2 06/Q4 07/Q2 07/Q4 08/Q2 08/Q4 09/Q2 09/Q4 10/Q2 10/Q4 11/Q2 11/Q4 12/Q2 12/Q4 13/Q2 13/Q4 14/Q2 14/Q4 15/Q2 15/Q4 16/Q2 16/Q4 17/Q2 17/Q4 18/Q2 18/Q4 Number of regular employees (both sexes) Number of non-regular employees (both sexes) Rate of non-regular employees (both sexes, right scale) mil. persons Before QQE After QQE Regular employees -0.6% (annualized) +1.1% Non-regular employees +1.5% (annualized) +2.4% Introduction of QQE % Note: Regular employees and non-regular employees exclude executives of companies and corporations. The figures for "Before QQE" and "After QQE" show the annualized growth rates of employees from 2008/Q1 to 2013/Q1 and those from 2013/Q1 to 2018/Q4, respectively. Source: Ministry of Internal Affairs and Communications, "Labour Force Survey." Chart 1 Employment
moving into managerial positions also should increase. In fact, the share of managerial d by women has been Chart 2 Employment of Women and the elderly mil. persons Introduction of QQE 10 Before QQE Non-regular employees(female)+1.2%(annualized+2.6% Regular employees(female) +0. 2%(annualized)I+2.0% After QQE regular employees(both sexes, aged 65 years and over)+5.7%(annualized+12.1% employees(both sexes, aged 65 years andover) +3.7%(amualized+6.9% 8等: 8黑器等等溪 -Number of regular employees(both sexes, aged 65 years and over) Number of non-regular employees( both sexes, aged 65 years and over) Number of regular employees(female) Number of non-regular employees(female) Rate of non-regular employees(female, right scale) Rate of non-regular employees(both sexes, aged 65 years and over, right scale Rate of non-regular employees(both sexes, aged 15-64 years, right scale) Note: Regular employees and non-regular employees exclude executives of companies and corporations. The figures for"Before QQE"and"After QQE"show the annualized growth rates of employees from 2008/Q1 to 2013/Q1 and those from 2013/Q1 to 2018/Q4, Source: Ministry of Internal Affairs and Communications, " Labour Force Survey. Moreover, Chart 2 also shows that employment of the elderly has been growing. However, in the case of the elderly, the share of non-regular employees has been rising. The reason likely that many are hired as temporary or part-time workers after reaching retirement age 2 For details, see Ministry of Health, Labour and Welfare, FY2017 Basic Survey of Gender equalit in Employment Management(available only in Japanese), July 2018
3 moving into managerial positions also should increase. In fact, the share of managerial positions occupied by women has been on a rising trend. 2 Moreover, Chart 2 also shows that employment of the elderly has been growing. However, in the case of the elderly, the share of non-regular employees has been rising. The reason is likely that many are hired as temporary or part-time workers after reaching retirement age. 2 For details, see Ministry of Health, Labour and Welfare, FY2017 Basic Survey of Gender Equality in Employment Management (available only in Japanese), July 2018. Chart 2 Employment of Women and the Elderly 0 10 20 30 40 50 60 70 80 0 2 4 6 8 10 12 14 16 Feb. 1984 Feb. 86 Feb. 88 Feb. 90 Feb. 92 Feb. 94 Feb. 96 Feb. 98 Aug. 99 Aug. 2000 Aug. 01 02/Q2 02/Q4 03/Q2 03/Q4 04/Q2 04/Q4 05/Q2 05/Q4 06/Q2 06/Q4 07/Q2 07/Q4 08/Q2 08/Q4 09/Q2 09/Q4 10/Q2 10/Q4 11/Q2 11/Q4 12/Q2 12/Q4 13/Q2 13/Q4 14/Q2 14/Q4 15/Q2 15/Q4 16/Q2 16/Q4 17/Q2 17/Q4 18/Q2 18/Q4 Number of regular employees (both sexes, aged 65 years and over) Number of non-regular employees (both sexes, aged 65 years and over) Number of regular employees (female) Number of non-regular employees (female) Rate of non-regular employees (female, right scale) Rate of non-regular employees (both sexes, aged 65 years and over, right scale) Rate of non-regular employees (both sexes, aged 15-64 years, right scale) mil. persons Introduction of QQE % Note: Regular employees and non-regular employees exclude executives of companies and corporations. The figures for "Before QQE" and "After QQE" show the annualized growth rates of employees from 2008/Q1 to 2013/Q1 and those from 2013/Q1 to 2018/Q4, respectively. Source: Ministry of Internal Affairs and Communications, "Labour Force Survey." Before QQE After QQE Non-regular employees(female) +1.2% (annualized) +2.6% Regular employees (female) +0.2% (annualized) +2.0% Before QQE After QQE Non-regular employees(both sexes, aged 65 years and over) +5.7% (annualized) +12.1% Regular employees (both sexes, aged 65 years and over) +3.7% (annualized) +6.9%
Because Japan 's population is aging, this means that it is unlikely that the share of non-regular employees in employment as a whole will decrease. However, looking at employees between 15 and 64 years of age, the share of non-regular employees has been declining since around 2014 While it is difficult for the elderly to obtain regular employment, the fact is that more and more are gaining the opportunity to work. In September 2017, the government launched the Council for Designing a 100-Year Life Society, "and in June 2018 it released the report B Jasic [ Design for the Human Resources Development Revolution, " calling for increased employment of the elderly At the same time, however, the proliferation of the notion of a 100-Year Life"may have made people aware of the longevity risk again, which may have led to the rise in the savings rate, or in other words, the decline in the consumption rate, which I will talk about later Decrease in suicides When unable to find a job in the face of a difficult employment situation, being under such stress causes one to question their worth to society. Indeed, studies show that suicides increase in tandem with a rise in the number of unemployed. Assuming that this is true, suicides should decrease if the unemployment rate were to decline. Chart 3, which shows the number of suicides and the unemployment rate, indicates that the two are linked: as the unemployment rate rises, the number of suicides increases, and vice versa. While i do not think that suicides are caused by economic problems alone, what is clear is that the number of suicides per year has fallen by 7,000 or more since 2012 as a result of the upturn in the economy and the decline in the unemployment rate 3 At the G-20 Symposium"For a Better Future: Demographic Changes and Macroeconomi Challenges" held in January 2019, seven out of 13 speakers stressed the importance of labor force participation by the elderly in overcoming demographic challenges posed by the aging I ee, for example, Yasuyuki Sawada, Michiko Ueda, and Tetsuya Matsubayashi, Economic Analysis of Suicide Prevention Towards Evidence-Based Policy-Making, Singapore: Springer, 2017
4 Because Japan's population is aging, this means that it is unlikely that the share of non-regular employees in employment as a whole will decrease. However, looking at employees between 15 and 64 years of age, the share of non-regular employees has been declining since around 2014. While it is difficult for the elderly to obtain regular employment, the fact is that more and more are gaining the opportunity to work. In September 2017, the government launched the "Council for Designing a 100-Year Life Society," and in June 2018 it released the report "[B]asic [D]esign for the Human Resources Development Revolution," calling for increased employment of the elderly.3 At the same time, however, the proliferation of the notion of a "100-Year Life" may have made people aware of the longevity risk again, which may have led to the rise in the savings rate, or in other words, the decline in the consumption rate, which I will talk about later. Decrease in Suicides When unable to find a job in the face of a difficult employment situation, being under such stress causes one to question their worth to society. Indeed, studies show that suicides increase in tandem with a rise in the number of unemployed.4 Assuming that this is true, suicides should decrease if the unemployment rate were to decline. Chart 3, which shows the number of suicides and the unemployment rate, indicates that the two are linked: as the unemployment rate rises, the number of suicides increases, and vice versa. While I do not think that suicides are caused by economic problems alone, what is clear is that the number of suicides per year has fallen by 7,000 or more since 2012 as a result of the upturn in the economy and the decline in the unemployment rate. 3 At the G-20 Symposium "For a Better Future: Demographic Changes and Macroeconomic Challenges" held in January 2019, seven out of 13 speakers stressed the importance of labor force participation by the elderly in overcoming demographic challenges posed by the aging population. 4 See, for example, Yasuyuki Sawada, Michiko Ueda, and Tetsuya Matsubayashi, Economic Analysis of Suicide Prevention Towards Evidence-Based Policy-Making, Singapore: Springer, 2017