Realize the 1 million Job Creation Plan in the Diet
SG on the Government's "Emergency Economic Package"
(4 December 1998)

The government agreed on "Emergency Economic Package" stimulus measures of more than 6 trillion-yen in permanent tax cuts and an entire project scale of more than 17 trillion-yen. The government also announced it planned to make every possible effort to realize various measures "to generate demand so that people may say with confidence that the economy for 1999 shows definite growth." RENGO responded on the same day by releasing a statement by Secretary General Sasamori. "We will do our utmost in the extraordinary session for ratification of the 3rd supplementary budget, including economic measures to revive the economy, create jobs and stabilize living standards, and cutting income taxes."

The 144th extraordinary Diet session that convened on November 27 is scheduled to continue for 18 days until December 14. Deliberations continue on the 3rd Supplementary Budget Bill with its emergency economic package and the bill to freeze the Fiscal Structure Reform Law. The government is planning to present the 3rd Supplementary Budget Bill at the December 4 session. In keeping with this, RENGO conducted street meetings in Yurakucho with each of the opposition parties on December 4, and held its "2nd Central Rally for Implementing RENGO Demands" at the Tokyo International Forum.

Since September RENGO has submitted requests to the government and each political party, that the government conduct large-scale tax cuts and establish a project to create jobs in order to beef up the economy and bolster employment. RENGO applauds the government's efforts as a first step in putting the economy back on track. The government earmarked 1 trillion-yen for a project to create jobs, set out to expand the credit guarantee system and its application to medium-standing firms, swinging long-term financing of working funds by government banking agencies into full gear as a credit crunch countermeasure. However, many of measures, such as 4 trillion-yen income tax cut, are not clear as to when they go into effect. Revenue source funding for the Emergency Economic Package, including income tax cuts, should be reviewed in the 3rd Supplementary Budget in the upcoming extraordinary session in late November and enforced immediately thereafter.

Several parts in "the package" need improvement.

First, the package suggests tax reductions for people in the upper income brackets. Working for large-scale tax cuts for middle-low income workers to maintain fairness in the distribution of the tax burden and revive consumption are most necessary. Tax cuts should be implemented from January 1999 to break consumption stagnation.

Second, although the package mentions creating a million new jobs, specific job numbers for each measure are not indicated. Employment improvement measures should be annotated with target numbers. Furthermore, in order to support the growing number of unemployed it is necessary to immediately prolong training payments from Employment Insurance Law and activate the "Emergency Employment Creation Fund" (tentative). Moreover, as there is a risk of increase in unstable employment, revision of the Dispatched Worker Law should be considered separately.

Third, although over 8 trillion-yen in projects intended to build the social-capital infrastructure are included in the package the content remains entirely industry-oriented as before. Changes to welfare and standard of living-oriented issues such as nursing, childcare support, and environmental conservation must be considered as well as job creation issues.

The prospect for economic recovery is bleak due to the delay of implementation of countermeasures. The government's response thus far could be characterized by its lack of impending crisis and speed. It is crucial for the government to restore credibility to the economy and its policies through prompt and decisive measures. Further, the government needs to show its commitment to creating a large-scale budget for the 1999 fiscal year to improve the economy.

RENGO will continue to press for ratification of the 3rd supplementary budget with its measures for economic relief, job creation, the stabilization of the standard of living, and income tax cuts at the extraordinary Diet session in late November.



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