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RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #5903/01 2840818
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R 110818Z OCT 06
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 7301
INFO RUEHBJ/AMEMBASSY BEIJING 4508
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RUEHUL/AMEMBASSY SEOUL 0624
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RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUEHIN/AIT TAIPEI 6153
RHHMHBA/COMPACFLT PEARL HARBOR HI
RUEAUSA/DEPT OF HHS WASHINGTON DC
RHMFIUU/COMUSJAPAN YOKOTA AB JA
RUALSFJ/USFJ DIA REP YOKOTA AB JA
RUEHC/DEPT OF LABOR WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/TREASURY DEPT WASHDC

UNCLAS SECTION 01 OF 03 TOKYO 005903 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
PARIS FOR OECD 
STATE PASS TO USTR FOR AUSTR CUTLER AND MBEEMAN 
TREASURY PASS TO FEDERAL RESERVE BOARD (JKHOLI) AND SAN 
FRANCISCO FEDERAL RESERVE (RNAYLOR) 
USDOC FOR 4410/ITA/MAC/OJ/NMELCHER 
 
E.O. 12958: N/A 
TAGS: ELAB PGOV SOCI ECON EFIN EINV JA
SUBJECT: ABE LAYS GROUNDWORK FOR SOCIAL PROGRAMS 
 
 
Summary 
------- 
¶1.  (SBU) Although Prime Minister Abe's campaign platform for 
addressing social disparity issues lacked detail, he has 
already laid significant groundwork for related government 
programs, according to Cabinet Office and ministry contacts. 
Six members of his so-called "second chance" parliamentary 
committee on creating societal and employment opportunities 
have found spots in either the cabinet or the Prime 
Minister's Office.  Individual ministries have developed a 
slew of small-scale program proposals, and ministries have 
been told to plan for social programs in their budgets.  We 
expect to see legislation calling for social programs in the 
2007 Diet session and believe that the specifics of the 
programs and funding, once known, will be a useful indicator 
of how the Abe administration will balance economic reform 
issues of interest to the United States, budget control, and 
political demands.  End summary. 
 
Widening Social Inequality: Perceptions and Response 
--------------------------------------------- ------- 
¶2.  (SBU) Although there is disagreement about the nature and 
causes of current demographic and labor trends, Japanese 
society is engaged in a debate about whether there is a 
widening social divide between career workers and 
part-timers, between high- and low-income earners, and 
between the well-being of large cities and the declining 
fortunes of outlying regions.  This conversation about 
Japan's "winner group" and "loser group" tugs at deeply held 
(though sometimes mythic) convictions about fairness and 
equality in Japanese society and the postwar labor system, 
and it spills into high-profile social issues such as Japan's 
falling birthrate. 
 
¶3.  (SBU) Prime Minister Abe made addressing social disparity 
issues a theme of his campaign, using the slogan of a "second 
chance" to signal the intent to give people who feel left 
behind another chance to succeed.  While his platform was 
vague on details, it suggested his administration might 
address social disparity issues through new social safety net 
and "family-friendly" programs targeting medical and pension 
benefits.  Moreover, Abe immediately signaled his intent to 
emphasize these issues by adding a "second chance" portfolio 
to his new cabinet. 
 
Groundwork Already Laid for Social Programs 
------------------------------------------- 
¶4.  (SBU) Despite the lack of detail in Abe's platform, he 
has been laying the groundwork for programs to address social 
disparity issues since before he became Prime Minister, 
contacts in the Cabinet Office and at the Ministry of Health, 
Labor, and Welfare (MHLW) told Econoff in September meetings. 
 In March, as Chief Cabinet Secretary, Abe convened an 
interministerial group to study how to expand opportunities 
within Japanese society.  The group mostly consisted of 
director general-level representatives from the Cabinet 
Office, the Financial Services Agency (FSA), the National 
Police Agency (NPA), the Japan Defense Agency (JDA), the 
Ministry of Internal Affairs and Communications (MIC), the 
Ministry of Justice (MOJ), the Ministry of Foreign Affairs 
(MOFA), the Ministry of Finance (MOF), the Ministry of 
Education (MEXT), the Ministry of Health, Labor, and Welfare 
(MHLW), the Ministry of Agriculture (MAFF), the Ministry of 
Economy, Trade, and Industry (METI), the Ministry of 
Transportation (MLIT), the Ministry of Environment (MOE), and 
the National Personnel Agency.  (Note: A Japanese 
Director-General holds a position equivalent to an Assistant 
Secretary in a U.S. Federal Government Department.) 
 
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TOKYO 00005903  002 OF 003 
 
 
 
¶5.  (SBU) Abe has also engaged his fellow LDP politicians on 
social inequality issues.  According to media reports, at 
least 94 LDP politicians from across factional lines joined 
Abe's parliamentary group studying "second chance" issues 
during the run-up to the LDP presidential election.  Four of 
those members became cabinet ministers: Financial Services 
and "Second Chance" Minister Yuji Yamamoto; Minister of 
Internal Affairs Yoshihide Suga; Minister of Agriculture 
Toshikatsu Matsuoka; and Minister of State for Okinawan 
Affairs Sanae Takaichi.  A fifth member, Yasuhisa Shiozaki, 
is now the Chief Cabinet Secretary (effectively the Deputy 
Prime Minister), and two other members, Eriko Yamatani and 
Hiroshige Seko, have been appointed as Special Advisors to 
the Prime Minister. 
 
Bottom-up Program Development Approach 
-------------------------------------- 
¶6.  (SBU) When the "second chance" interministerial group was 
formed, written principles were distributed of then Chief 
Cabinet Secretary Abe's vision of how to move towards a 
society of greater opportunity, according to an internal GOJ 
memorandum obtained from MHLW contacts.  The memorandum 
stressed the importance of rewarding individual effort, of 
preventing the system from locking people into groups of 
winners and losers, and of preserving individuals' ability to 
make their own life decisions.  It suggested the immediate 
need for programs targeting failed business owners, students 
who have failed school entrance exams, workers who have lost 
jobs due to restructuring, the sick and disabled, and those 
transitioning from one life stage to another (such as young 
people moving into adulthood, women returning to the 
workforce after having children, retirees, those starting 
businesses, and those seeking retraining).  Over the medium 
term, it suggested studying how to build a new "life model," 
including fostering the societal participation of Japan's 
rapidly growing retiree population, increasing the range and 
flexibility of work options, reconsidering the traditional 
personnel system where new graduates move directly to career 
positions, and "balancing" the difference in benefits between 
career and non-career workers. 
 
¶7.  (SBU) During the interministerial committee's March 
meeting, each participating ministry was tasked to prepare 
proposals within the suggested framework, according to a 
Cabinet Office contact, and an interim report was submitted 
in May.  Given the bottom-up approach to program development, 
the report has a laundry-list quality.  Proposals include 
expanding the social insurance system in order to address the 
needs of part-time and contract workers, increasing 
mid-career training opportunities, publicly lauding companies 
that hire people outside the traditional 
college-graduate-to-career-track system, and hiring career 
counselors.  Several suggestions involve increasing the 
number of so-called "Hello Work" information sharing and 
counseling centers to match potential employees with 
employers.  Abe visited one of those centers in Osaka in the 
run-up to the LDP presidential election. 
 
¶8.  (SBU) Ministries also received instructions to keep 
"second chance" programs in mind as they submitted budget 
requests in August, Cabinet Office contacts told Econoff. 
They explained that specific priorities for ministerial 
budgets have yet to be determined, which gives the ministries 
flexibility to respond to new programs legislated in the 2007 
Diet session.  While acknowledging the ability to adjust 
budgets, MHLW contacts were less sanguine about how easily 
"second chance" programs will be incorporated with other 
 
TOKYO 00005903  003 OF 003 
 
 
budget priorities, and the media have speculated that new 
social programs could keep the government from cutting 
discretionary ministerial spending as part of its fiscal 
consolidation plan. 
 
Legislative Agenda 
------------------ 
¶9.  (SBU) The local media report that the Abe administration 
may submit a social disparity correction bill or a "second 
chance" promotion bill (or both) to the 2007 Diet session. 
Cabinet Office contacts told Econoff that the 
interministerial committee created by Abe aimed to use the 
new Labor Contracts Law, which is currently being drafted by 
MHLW, to advance "second chance" programs (the observations 
of industry contacts who work with MHLW on labor legislation 
corroborate this approach -- though some contacts question 
whether the bill will be ready in time).  Moreover, MHLW 
officials told Econoff that "second chance" program 
provisions could appear in any of four pieces of labor 
legislation MHLW is now preparing for the 2007 Diet session. 
 
Comment 
------- 
¶10.  (SBU)  Regardless of the form the planned bills take, it 
is clear the Abe administration is pressing for "second 
chance" legislation during the 2007 Diet session. 
Politically, advancing such legislation before next year's 
Upper House elections would be a smart move for Abe, as he 
could blunt opposition complaints about the LDP's economic 
stewardship without directly taking a position on social 
disparity issues or criticizing previous LDP policies. 
Economically and socially, the laundry-list approach of many 
small-scale programs suggests tinkering in the short term 
while medium-term approaches are debated.  While we will also 
be following how "second chance" programs affect efforts to 
increase labor mobility and productivity, the biggest 
immediate impact may well be on ministerial budget 
negotiations, where the Abe administration's need to balance 
the competing demands of social and economic reform, budget 
control, and domestic politics will play out. 
 
 
SCHIEFFER