FINANCIAL TIMES


 

The world’s post-coronavirus economic future could depend on mass career migration away from sectors such as retail, entertainment and travel, Japan’s most powerful business leader has warned.

Hiroaki Nakanishi, chairman of Hitachi and head of the Keidanren business lobby, told the Financial Times in an interview that propping up businesses during lockdown was not sufficient and governments would need to shift spending away from furloughs towards fundamental economic restructuring.

His comments point to the next stage in the coronavirus crisis, as hopes for a swift recovery dim and temporary lay-offs become permanent redundancies in the worst affected sectors.

“Even if we resolve coronavirus completely, then will our towns be as lively as before?” said Mr Nakanishi. “Just saving struggling companies [won’t be enough] for the economies of Japan or the rest of the world.

“It’s important to think really carefully about how far to encourage people to change jobs. If you assume that the corona pandemic is going to become a long-term thing, then that will be essential.”

Although the historic role of the Keidanren chief has been to protect the interests of corporate Japan, Mr Nakanishi’s comments show a growing acceptance that Covid-19 will cause bankruptcies — and require radical changes to how the country does business.

Mr Nakanishi believes that fiscal support is essential, but as the crisis drags on, governments will have to shift their focus from keeping companies alive to promoting structural changes in the economy.

“Maybe for a year [governments] just do everything they can to help, but if it carries on for two or three years that’s not possible,” he said. As chief executive of Hitachi, Mr Nakanishi became famous for revamping the sprawling conglomerate, merging or selling divisions and improving its financial performance.

As Keidanren chairman, he has been at the heart of Japan’s response to Covid-19, helping to set government policy as well as leading calls for change in working practices. In a sharp break with Japan’s culture of long hours, Keidanren has called on member companies to consider a four-day working week, as well as teleworking and staggered office hours when they reopen, to allow for greater social distancing.

Mr Nakanishi has also said he is not opposed to changing the start of Japan’s school year from March to September, aligning with much of the rest of the northern hemisphere. He stirred controversy, too, when he said the country’s use of physical seals for documents was outdated.

A prominent critic of Japan’s habit of measuring performance by hours spent in the office, Mr Nakanishi said the crisis was accelerating a move towards more flexible working practices.

He gave Japan high marks for its response to Covid-19, saying that authorities had been forced to act with limited information about the nature of the virus. But the wisdom of Japan’s early decision to close schools and introduce voluntary social distancing had been borne out by the low number of coronavirus cases and deaths.

“Looking at the results so far compared with other countries, I think we’ve handled it pretty well,” he said. Japan has had about one death per 200,000 people, compared with rates 100 times higher in the worst affected European countries.

Although Japan has lifted a state of emergency across much of the country, he acknowledged the country’s heavy dependence on a healthy global economy. “Large parts of Japan live off their dealings with the rest of the world, so when we relax restrictions we risk highly unpredictable waves of infection,” Mr Nakanishi said. “We need to prepare for those worst-case scenarios now.”