Foreign Press Centre Japan Press Briefing: Japan’s Recovery and Role after the COVID-19 pandemic, 28 April 2021

 

Remarks by Angel Gurría,

Secretary-General, OECD

Paris, 28 April 2021

Thank you Ambassador Kodama for the kind introduction and the opportunity to participate in this press briefing with the Foreign Press Centre of Japan (FPCJ).

The damage of COVID-19 across the world has been enormous. Three million lives have been lost and the economic impact on households and firms has been huge. But the worst may be behind us. Our most recent projections for the world economy suggest growth will be 5.6% this year and world output should return to pre-crisis levels by mid-2021.

This projection crucially depends on the race between the vaccination rate and the spread of emerging variants of the virus. The recovery will be uneven across the globe and many countries may need more time to return to pre-crisis levels. Governments must continue to provide fiscal support. They must also actively use policy instruments to restore our economies and build back better, or as I prefer to say, build “forward” better.

For Japan, the recovery is an opportunity to create a more resilient, inclusive and sustainable future. This will require action on several fronts, as well as building on successful past reforms. Let me outline some key areas.

First, one of Japan’s biggest challenges remains its rapidly ageing population, which is also an issue facing other countries in the region. Japan has the highest old-age dependency ratio of all OECD countries. In 2017, there were over 50 persons aged 65-plus for every 100 persons aged 20 to 64. By 2050, this ratio is projected to rise to 79.

Extending working lives has helped boost labour force participation in recent years and offset the impact of ageing. However, in the era of 100-year life spans, Japan needs to shift to more flexible employment and wage systems based on performance, rather than age, to better utilise its human capital. To capitalise on the digital transformation, Japan should also invest in skills for middle-aged and older workers, and on policies to minimise the digital divide.

Second, COVID-19 hit women particularly hard. In Japan, while women’s employment has increased significantly due to labour shortages, women are still under-represented in leadership positions. For example, women make up less than 10% of lawmakers in the parliament’s lower house. Women also still face obstacles to employment, such as being the main family caregivers. Promoting work-life balance and flexibility, as well as measures to stop discrimination, would lead to greater roles for women in the post-COVID era.

Third, the recovery is an opportunity to make growth greener. In the Asia-Pacific region, natural disasters including storms and flooding have been more frequent and severe in recent years, which is very likely the consequence of climate change. Sustainability requires enhanced disaster prevention and management, but most importantly, reducing greenhouse gas emissions.

We commend Japan and other countries’ recent commitments to achieve carbon neutrality, or “net zero” emissions by 2050. The OECD stands ready to support governments in the implementation of the Paris Agreement goals, including through the new International Programme for Action on Climate (IPAC).

Finally, last year demonstrated that trade and global value chains were crucial in overcoming the pandemic. Equally, international collaboration will be essential for a resilient, inclusive and sustainable recovery, especially for the mass production and widespread distribution of affordable vaccines.

Japan has been a leader in concluding regional trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Economic Partnership Agreements and the Regional Comprehensive Economic Partnership (RCEP) as well as spearheading efforts to create common rules for digital trade in the G20. Our analysis found that CPTPP alone could lift real incomes by USD 490 per worker by 2030. Crucially, the more countries that participate in efforts to reduce trade costs, and the more comprehensive these efforts are, the greater the benefits. Japan’s leadership, including on issues of digitalisation, sustainability, and innovation will play an essential role.

Dear Friends,

Japan has made a lot of progress over the past 15 years, although challenges remain. The OECD stands ready to work with you, and for you, in designing, developing and delivering better policies for better lives in Japan, the Asia-Pacific and beyond.

Thank you.

 

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