Devnet Follow the UK’s lead and start Post-COVID-19 now!

by DEVNET Japan

Fumiyasu Akegawa – Chair & CEO DEVNET INTERNATIONAL

TOKYO 2020 has started on July 23, but it is lacking excitement due to the decision to hold no spectators.  On the contrary, just a few weeks ago, from July 6th to 11th, at Wembley Stadium in London, England, where the semifinals and finals of the European Football Championship were set. The British government has granted admission to 65,000 people, which is 75% of the maximum capacity of 90,000. And, the games were very exciting. The subsequent Wimbledon tennis final was held with a similar measure. It can’t be helped if you’re afraid of Covid-19. The British government’s bold stance is to shift the judgment index from infection rate to mortality rate and search for symbiosis, and on July 19, the regulation on Covid-19 measures was completely lifted. The number of people infected with the mutant strains in the country has increased significantly, and it was decided by British Prime Minister Johnson while there were many voices opposed to the total cancellation. The difference from Japanese politicians who take no risk in the name of protecting the safety and security of the people is clear.

Looking from politics to the economy, this is also disastrous. An advisory body of the Ministry of Health, Labor and Welfare has decided to raise the national average minimum wage (hourly wage) in 2021 to 930 yen. It was the largest increase ever (3.1%), and the news was immediately expressing anguish over the cost increase on the part of business owners. However, according to the 2020 OECD survey, the minimum hourly wage (dollar equivalent) of major countries is 8.2 dollars in Japan, while many countries are higher than Australia 12.9 and Luxembourg 12.6. It’s not a big stumbling block for business owners. Low wages, low prices, low labor productivity, low economic growth, and the words that describe Japan today are warnings that it is not the case when the past illusions of developed and economic powers are forever clinging to.

Comparing the 1990 and 2020 nominal GDP of the bursting of the bubble (data exhibiting IMF, the same applies hereinafter), Japan’s (third place) GDP growth rate is 1.6 times, the lowest among the top 10 countries as of 2020. Especially, the United States (1st place) with a high growth rate of 3.5 times, China (2nd place) with 37 times, and India (6th place) with 8.3 times are no longer comparable. There is no point in discussing the total GDP and the growth rate for Japan. Looking at the nominal GDP per capita, the decline in Japan’s competitiveness is even more apparent, falling from 8th place in 1990 to 23rd place in 2020, surpassing 15 countries. This is where Japan should focus on improvement in the future. My point is tha t we should aim to be an independent country with an appropriate economic scale that has characteristics that make people feel affluent, with a shift to labor productivity, rather than an economic powerhouse or developed country that emphasizes scale. It’s my theory. Countries that should be referred to are Switzerland, Austria, Australia, Finland, Denmark, Sweden, etc., which are not called economic powers, but are attractive as tourist destinations, high-value-added financial industry, furniture with simplicity, apparel, IT, etc. These are attractive small countries with global brands. The countries listed here all exceed Japan in nominal GDP per capita in 2020.

Japan’s continued export-dependent industrial model to drag past glory and maintain its economic power will also rely heavily on China, the world’s largest economy. As Japan’s ally, the United States, is advancing its economic decoupling policy with China, Japan will have to draw a line in its dealings with China, which does not share basic values. In that respect as well, the conversion to an economically independent country based on a certain scale of the domestic consumer market is consistent from a geopolitical point of view.

There will be a big difference in playback speed between Japan, which is waiting for the arrival of post-Covid-19, and a country like the United Kingdom, which has already started post-Covid-19. Japan is a low-growth economy in the first place. For the transition to a high value-added industrial model, the accompanying improvement in labor productivity, the transition to an independent country with a characteristic appropriate economic scale, and the creation of a society in which the people can experience affluence and growth through these, and for that transition. It is necessary for governments and managers to change their mindset and structure with a drastic and speedy feeling.