Verify the effects of Abenomics in the future ...?

Verify the effects of Abenomics in the future ...? November 18, 14:26

Prime Minister Abe, whose term of office is the longest in the history of constitutional government. I first assumed office 12 years ago. During this time, did our lives become richer? We will examine the effects of “Abenomics,” the policy of the Abe administration's first place.

What is Abenomics?

A series of economic policies launched by the second Abe administration, which was launched in 2012 and December 2012, is expressed as “Abenomics”. There are three policy pillars.

“Bold monetary policy”, “Flexible fiscal policy” and “Growth strategy”. This was called “Three Arrows” and aimed to break away from deflation, where prices continued to fall, and to achieve sustained economic growth.

Of these, in the first monetary policy, the government and the Bank of Japan announced an unusual joint statement. The BOJ has set a goal of "achieving a price increase of 2% in about two years".

He then purchased a large amount of government bonds and started a large-scale monetary easing called “another dimension” to supply a large amount of funds to the market, and tried to wipe out the deflationary psychology that permeated companies and the public.

In fiscal policy, the second arrow, we aimed to expand demand by building up public works, in addition to accelerating infrastructure development such as the Linear Chuo Shinkansen, leveraging low interest rates.

In the growth strategy, the third arrow, we aimed to raise the economic ability through deregulation.

Boost corporate growth by reducing the effective corporate tax rate. We also worked to accelerate negotiations such as the TPP = Trans-Pacific Partnership Agreement to promote free trade and revitalize the economy.

The Abe administration made efforts to overcome deflation based on this “Abenomics” as the basis of economic policy, and then focused on economic policies that focused on the individual life of each child, such as supporting child-rearing and improving the environment in which women and the elderly can work. We are strengthening our attitude.

Economic effects of Abenomics

The financial market has changed significantly due to Abenomics.

At that time, the Japanese industry was suffering from the historically strong yen. In 2011, the “super” yen appreciation, which recorded a record high of 1 dollar = 75 yen. With the start of the second Abe administration and the Bank of Japan's different dimension of monetary easing, the yen began to move rapidly in the direction of yen depreciation.

In 2015, the yen depreciated to the 125 yen level on the dollar, and the profitability of exporting companies improved significantly.

The stock market also recovered rapidly. The Nikkei Stock Average, which was 18,180 yen on December 25, 2012, the day before the start of the second Abe administration, rose to 24,270.62 yen in October last year (2018), the first time in 27 years. It became high price.

Corporate profits have also increased significantly. According to the corporate statistics of the Ministry of Finance, the company's “ordinary profit” was approximately 48.400 billion yen in FY2012. In fiscal 2018, it expanded to approximately 83.900 billion yen.

Employment conditions continued to improve as corporate activities improved. The effective job offer ratio, which shows how many jobs are available from companies for one job seeker, was 0.83 times in December 2012. I wanted to work but there was not enough work.

It rose 1.63 times in August 2018. It has been the highest level for the first time in about 45 years, and has recently maintained 1.57 times in September.

According to the Labor Force Survey of the Ministry of Internal Affairs and Communications, the average number of people at work in 2012 was 66.4 million in 2018, an increase of more than 3.8 million.

The main reason is the increase in working women and the elderly. The government has improved the employment situation as one of the major achievements of Abenomics.

The business world is evaluated

The business community generally appreciates the economic policy of the Abe administration.

“When the second Abe administration was established, the yen was in the 1/80 yen range, and the international competitiveness of major Japanese companies, especially exporters, was lost. Since then, the rate has been normalized, resulting in a significant increase in profits: the international situation has become unstable since the start of the Trump administration in the United States, and it is difficult to know how long the supremacy between the United States and China will last “Prime Minister Abe stands very skillfully in the gap between the United States and China, and being a long-term government has become a property in the current international situation where there is a lot of change.”

Keidanren Nakanishi said, “Abenomics has strengthened Japan's competitiveness as a result, despite a lot of debate. I believe that it has contributed greatly through stable economic management. I also highly appreciate the fact that Japan has created a relatively good position in the situation, ”he said.

On the other hand, “Because the economic base is about to change drastically, I would like you to make a policy that promotes growth, not just economic measures in front of you.” I asked them to come up with a growth strategy for the Japanese economy from a perspective.

“As far as the economic data is concerned, the situation is clearly getting better, and the commitment to the top priority of the economy is being fulfilled,” said Mr. Hamada, the secretary of Keizai Doyukai.

On top of that, Mr. Hamada said that many people are worried about the future. “I am convinced that there is uncertainty about the social security system that people's consumption will not grow. I look forward to working closely with the establishment of a all-generation social security system, ”he called for a sustainable social security system in the future.

What are the benefits of living?

Corporate performance and employment conditions have improved, but to what extent does the benefit reach our lives? The catch is divided.

Looking at household surveys by the Ministry of Internal Affairs and Communications, income is increasing moderately. The average monthly income for salaried workers was 460,7774 yen in 2012, but it was 492,594 yen in 2018, an increase of more than 24,000 yen.

The average income per household is increasing according to the National Life Survey of the Ministry of Health, Labor and Welfare. However, in detail, the average income of the top 20% of households with the highest income increased, while the average income of the middle class decreased.

Looking at this data, there is a possibility that it has greatly benefited rich families.

Also, in the household survey, looking at the average spending of salaried workers, the burden of taxes and social insurance premiums is heavy. The monthly burden of “direct tax” such as income tax and resident tax and “social insurance premium” such as pension / medical service was 83,840 yen on average in 2012, but it was 91,490 yen in 2018. , Increased by over 7600 yen.

Depending on your income and family structure, the amount of taxes and social insurance premiums paid by each household will vary. However, it also shows that the burden is increasing as a whole. The welfare annuity premium has been increased every year until 2017, which has an impact.

Apart from this burden, the consumption tax rate has been increased from 5% to 10% during the 2nd Abe administration to cover social security, and payments for shopping are increasing.

Some experts point out that the increased burden is why many people are unable to realize the benefits of economic recovery even though their income has increased.

Some people point out that the aging of society will continue and the burden of taxes and insurance premiums will become heavier in the future, which has led to anxiety in the future.

On the other hand, some statistics show that the overall income inequality has been reduced as a result of tax and insurance contributions being used to redistribute income. The data is called “Gini coefficient”, which is an improvement over 2011 and 2017. As you can see, there are many different ways to see the data.

So what happened when you moved from home to business? Since 2012, companies have steadily accumulated profits and increased their reserves.

Looking at corporate corporate statistics of the Ministry of Finance, retained earnings that indicate the profits that companies have accumulated inside, so-called “retained earnings,” was 304 trillion yen in FY2012, but increased to 463 trillion yen in FY2018. It was. Company cash and deposits were 168 trillion yen in fiscal 2012, but increased to 223 trillion yen in fiscal 2018.

However, the “labor share”, which shows how much profit a company uses to pay employee salaries, continues to decline.

Looking at corporate corporate statistics, the labor share in 2012 was 72.3%. Over 70% of profits were paid to employees, but in fiscal 2018 it fell to 66.3%.

Increasingly, it is pointed out that companies are not able to realize the recovery of the economy because the companies are making money and not paying enough employees.

Abenomics from a household account book

Mr. Sugawara in his 40s living in Tokyo. A family of four of two children, a husband and an elementary school student.

I had a household account book since 2012 when “Abenomics” happened.

Analyzing monthly households based on the 7-year household account book, it became apparent that the net income from taking home was not increasing as expected.

From 2013, when Mr. Sugawara, who had quit his job to raise children, returned to work, the average monthly salary, including his wife's salary, allowances, and bonuses, increased by 84,000 yen. .

On the other hand, the payment of income tax, resident tax, and social insurance premiums such as pensions has increased, and the monthly burden has increased by 72,000 yen.

In addition to the annual increase in employees' pension insurance premiums up to 2017, Mr. Sugawara started paying nursing care premiums, which led to an increase in the burden.

As a result, net income, which is obtained by subtracting “tax and social insurance premiums” from “Monthly income”, has only increased by over 12,000 yen since 2013.

In addition, the consumption tax rate has been raised twice during this time, from 5% to 10%, and payments for shopping have increased.

In order to save money, we decided to eat out less than once a month and try to increase savings as much as possible to prepare for future child tuition and retirement.

Mr. Sakakibara said, “I don't think the economy has deteriorated, but I feel that my life is not recovering. Social insurance premiums and taxes are a considerable burden on the household, and they consume more than the previous year. I can't do that, and there is no guarantee that the social insurance premiums I'm paying will come back after retirement.

Abenomics Where is the future?

The Japanese economy began to recover in December 2012 when the second Abe administration was established, and the government is in a position that the longest post-war economic recovery has continued. However, the world economy has slowed down due to trade friction between the United States and China, and the Japanese economy is showing signs of modulation.

In the interim financial results of companies announced recently, there were a series of companies that revised downward the forecast for the current fiscal year, mainly in the manufacturing industry.

Some companies have started to reduce their employees, and if the decline in performance spreads, it may affect the future of employment, which has been greatly improved, and is one of the biggest achievements of Abenomics.

Challenges are also emerging in economic policy. In particular, one of the three arrows of Abenomics, the Bank of Japan's monetary policy, is getting stuck.

Another dimension of monetary easing started by the government and the Bank of Japan issuing a joint statement. The goal was to achieve a price increase rate of 2% in about two years.

The BOJ bought government bonds on an unprecedented scale, poured a large amount of money into the market, and took an unusual negative interest rate policy. However, the consumer price increase rate in September is only 0.3% positive, and it is not possible to see when the target of 2% will be achieved.

Long-term negative interest rate policies have made it difficult for banks to make profits with their corporate loans and mortgages, and life insurance companies have become difficult to operate. The side effects of monetary easing are becoming more noticeable.

Sumitomo Mitsui Financial Group's President Jun Ota said, “I think that the psychological aspect has changed as we move away from deflation, and there have been tremendous results. However, the Bank of Japan's negative interest rate policy has been introduced, and there are various negative effects. In the future, I would like you to consider the effects, risks, and impacts, and respond accordingly.

There are also major challenges in financial management. The government set the goal of changing the financial indicator of “basic fiscal balance” from deficit to surplus in FY2020.

However, we were unable to stop the increase in spending, and we postponed the goal of making a profit in FY2025.

According to the latest government outlook, even if high economic growth can be realized, a deficit exceeding 2 trillion yen will remain in FY2025.

While it is inevitable that social security costs will expand further due to the aging of the population, there is no clear path to fiscal consolidation.