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Saturday, Jul. 18, 1998
Major changes are urged to boost Japan's economy
Companies need more flexibility in hiring, firing practices to increase productivity, report says
By JOJI SAKURAI
Associated PressTOKYO - Key pillars of Japan's economic model are collapsing and industries must make dramatic changes to lift the economy out of recession, the government said Friday.
In a grim report, the Economic Planning Agency said Japan's economy is ``stagnating'' and that time-honored practices such as lifetime employment and seniority-based promotion are not working.
The annual report said that companies need more flexibility in hiring and firing practices to increase productivity and that businesses must become more accountable to their shareholders.
Seniority-based promotion and cozy corporate ties between related firms will not promote growth in important new fields such as software development, the report said.
As Japan's recession deepened and the number of bankruptcies increased, more and more companies heeded the call to restructure. But the government must do its part as well by carrying out further deregulation and implementing major financial and tax reforms, the report said.
Agency Director General Koji Omi said government efforts to fix the economy won't be impeded by Prime Minister Ryutaro Hashimoto's resignation Monday and the ruling party's search for a new leader.
``Members of the (ruling Liberal Democratic) Party agree that whatever government is formed, it will make economic policies its top priority,'' Omi told reporters.
Hashimoto's Liberal Democratic Party still controls the more powerful lower house, which chooses the prime minister. The party is now selecting a new leader.
Friday's report marks a departure from last year's ``white paper'' on the economy, which stated that Japan was on track for solid recovery and that injections of public spending were no longer needed.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web