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RR RUEHFK RUEHKSO RUEHNH
DE RUEHKO #2464/01 1521038
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R 011038Z JUN 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 4136
INFO RUEHUL/AMEMBASSY SEOUL 3307
RUEHBJ/AMEMBASSY BEIJING 7249
RUEHFR/AMEMBASSY PARIS 5514
RUEHNH/AMCONSUL NAHA 3788
RUEHFK/AMCONSUL FUKUOKA 1358
RUEHOK/AMCONSUL OSAKA KOBE 4920
RUEHKSO/AMCONSUL SAPPORO 2221
RUEHGV/USMISSION GENEVA 3077
RUEATRS/TREASURY DEPT WASHDC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 02 TOKYO 002464 
 
SIPDIS 
 
SIPDIS 
 
USTR FOR BEEMAN AND MEYERS 
PARIS FOR USOECD 
DOL FOR ILAB 
DOC FOR 4410/MAC/ITA/OJ/NMELCHER 
TREASURY FOR IA/DOHNER, HAARSAGER, AND POGGI 
 
E.O. 12958: DECL: 05/30/2017 
TAGS: ELAB ECON PGOV ETRD EAGR JA
SUBJECT: "LABOR BIG BANG" PROPOSALS ON HOLD 
 
REF: 06 TOKYO 7064 
 
Classified By: Ambassador J. Thomas Schieffer for reasons 1.4 b/d. 
 
Summary 
------- 
¶1.  (C) New Council for Economic and Fiscal Policy (CEFP) 
proposals to reform the labor market are on hold until after 
July's Upper House elections, and the six labor bills that 
the cabinet forwarded to the Diet are "so compromised" they 
will have little effect, CEFP private sector member Naohiro 
Yashiro told embassy officials.  Three of those bills now 
appear unlikely to be addressed in the current Diet session, 
which could further delay CEFP plans for labor reform.  Notes 
on Prime Minister Abe and the CEFP are appended.  End summary. 
 
"Labor Big Bang" on Hold... 
--------------------------- 
¶2.  (C) Movement toward a productivity-bolstering "labor big 
bang" (reftel) is on hold until after July's Upper House 
elections, CEFP private sector member and labor economist 
Naohiro Yashiro recently told Finatt and Econoff.  He 
explained that any differences between CEFP labor proposals 
and legislation submitted to the Diet could be used by the 
opposition to attack the Liberal Democratic Party (LDP), so 
there is an agreed policy to avoid raising new issues until 
after those bills have been passed. 
 
¶3.  (SBU) In the run-up to the current Diet session, the 
Ministry of Health, Labor, and Welfare (MHLW) formulated six 
labor bills, all of which have been approved by the cabinet. 
The Diet has passed three of those bills during the current 
session (concerning revisions to laws governing part-time 
employment, employment insurance, and regional employment 
promotion); three other bills remain.  They are a new Labor 
Contracts Law and proposed revisions to the labor standards 
and minimum wage laws. 
 
¶4.  (C) Measures addressing many of the most difficult (and 
consequential) labor issues, however, were removed from the 
labor bills as they were being finalized, often due to 
political concerns.  For example, according to an LDP 
contact, the "white-collar exemption" to foster more emphasis 
on individual productivity -- rather than on seniority and 
the number of hours worked -- was removed from the Labor 
Standards Law after LDP Secretary General Hidenao Nakagawa 
objected.  Nakagawa noted that the opposition had effectively 
branded the exemption as the "no overtime pay" bill, and, 
because it would be perceived as a pay cut, he argued that it 
would be foolish to pass such legislation immediately before 
an election. 
 
¶5.  (C) Asked about the quality of the bills, Yashiro 
lamented that the political opposition had effectively 
adopted former Prime Minister Koizumi's "one-phrase politics" 
and stated the six bills were "so compromised" that they 
would have little effect.  He suggested that it would be 
better to change the laws, but he could not assess whether 
changes would be politically feasible. 
 
...With Plans to Resume After Election 
-------------------------------------- 
¶6.  (C) Looking forward, Yashiro stated that the CEFP was 
planning to put out its next set of labor recommendations 
right after the elections, and that he expected a more 
intense period of reform for the next two years.  The first 
labor-related report would likely focus on re-introducing the 
"white-collar exemption" and floating measures to address 
foreign workers in Japan.  Yashiro noted that the public had 
not understood the intent of the "white-collar exemption" and 
that its re-introduction might be paired with additional 
social safety net measures, as well as an explanation of how 
greater focus on productivity could lead to a reduction in 
work hours and better "work-life balance."  To that end, 
Yashiro said he planned a public debate with President Takagi 
of the Japan Trade Union Federation. 
 
TOKYO 00002464  002 OF 002 
 
 
 
¶7.  (C) Yashiro acknowledged, however, that the labor bills 
might not be considered in the current Diet session.  If that 
happened, he surmised that the CEFP would further postpone 
comment and proposals on labor reform. 
 
Comment 
------- 
¶8.  (C) It now seems unlikely that the Diet will consider the 
remaining three labor bills during the current session, which 
would delay, it seems, the CEFP's more ambitious proposals. 
The remaining bills had been slated for consideration in the 
last week of this session, and wrangling over a response to 
recent revelations that the Social Insurance Agency lost or 
garbled 50 million payment records, as well as disruption 
from Agricultural Minister Matsuoka's apparent suicide, will 
likely push the bills' consideration into a special session 
this fall.  End comment. 
 
Notes on PM Abe and the CEFP 
---------------------------- 
¶9.  (C) Yashiro stated that "so far" Prime Minster Abe is 
supporting the CEFP, within which he described Minister Ota 
and Chief Cabinet Secretary Shiozaki as the key drivers.  He 
added, however, that opponents to the CEFP's reform agenda 
have actively tried to penetrate the decision-making process 
by directly handing briefing papers to the prime minister 
without CEFP vetting or discussion.  On other CEFP matters, 
Yashiro stated that while PM Abe had "his own style" and was 
not as dynamic as former PM Koizumi, he was well-briefed and 
keen about free trade discussions with Australia, which 
Yashiro described as a device to reform Japan's agricultural 
sector.  Senior Ministry of Economy, Trade, and Industry 
officials have told us the same, that the prime minister 
deliberately made the decision to enter free trade agreement 
negotiations with Australia with a level of ambition on 
agriculture that was a great deal higher than expected. 
 
 
SCHIEFFER