 Okay, so, okay, it's time. So let me start the economic session. So I'm Ipe Fujiwara, professor of macroeconomics at the Crawford School of Public Policy at ANU and the Faculty of Economics at the Keio University in Tokyo. So my background is a fake, I'm in Tokyo. And many of you are joining us from across Australia and that this is the joint event by the Australian, Australia-Japan Research Center and the Center for Applied Macroeconomic Analysis, that is the AJLC and the Karma of the ANU. Therefore, first I want to acknowledge and celebrate the first Australians on whose traditional lands each of us meet and I pay my respect to elders past and the present. Okay, so let me start the session. Today, we are really fortunate to have two truly distinguished, prominent and respected speakers. I want to use as many praising words as possible at this economic session. The first speaker is a professor, Professor Toshitaka Sekine at the Hitotsubashi University. Toshi was the director general of the research and the statistics department of the Bank of Japan from 2015 and 2019. Therefore, very well known as the chief economist of the Bank of Japan. I had the privilege to work under Toshi's dictator, director, not dictator, I'm sorry, the electorship while I was at the Bank of Japan. So, no, no, it's directorship. So that I can say without any hesitation that Toshi is the best of us I have ever had in my whole life. I feel like I'm saying the same thing every year when I have a former boss as a speaker, but this time it is the most true or truest and honestly, the most honestly. And if you have any question on the Japanese economy, Toshi is the very right person with 33 years of experiences as the central bank economist at the Bank of Japan. And then Toshi received a deep view in economics from Oxford University. And the second speaker is the professor, Sagiri Kitao at the University of Tokyo. Sagiri is the most active and the best researcher or macroeconomist in Japan. Sagiri received the PhD in economics at the New York University with the supervision by Thomas Sargent, Nobel laureates in economics in 2011. Upon her completion of the PhD study, Sagiri started working as the assistant professor at the University of Southern California, then she continued to work in prominent institutions, Federal Reserve Bank of New York, City University of New York, KO University where I am now and I had the privilege to work with her under now at the University of Tokyo. And this Sagiri is the recipient of the Nakahara Prize of the Japanese Economic Association at the award given to the best economist under the age of 45 in 2016. So in about the scheme of today's session, we will have the presentation first by Toshi and then by Sagiri. If you have any questions, please post them on the question features and then Sagiri and Toshi will answer to your questions after all their presentations. Okay, so without a further ado, I would like to welcome Toshi as the first speaker of this economic session. Toshi, are you ready? Okay, let me just share my slide first. Is it okay? Yes, I can see. Yep. Then first of all, thank you Ipe. Let me express my gratitude to organize for inviting me to this webinar. In fact, this is my second time to participate in Japan Update. Three years ago, I came to Kampawa and after that, even two parts for a follow-up session. I really had a good time then, including having discussion with Professor Gleisdell and Ciro, among others. At that time, I made a presentation on importance of maintaining a high-pressure status of the Japanese economy, which appeared to raise the productivity but dampen inflation. Then I argued that raising productivity could be more important than achieving 2% inflation given the headwind of demographic factors in Japan. At the end of the day, I also argued that so high-pressure economy would lift inflation although it would take quite some time. I must say that's how different things turned out. At that time, I never imagined a pandemic shock of COVID-19 that hit the global economy so severely. Today, I will talk about this new reality. My presentation is divided into two parts. First, I will go through very quickly how Japan's economy looks like now after the pandemic logout. Then I will discuss some policy implications. Then the first part of my presentation, how Japan's economy looks like. I will start with the figure that I am sure that's almost you, all of you are familiar with. These are charts of number of infected with COVID-19. The left-hand side panel is 7 days increase and the right-hand side panel is cumulative number. This vertical axis, which must be smaller in the later, which is the case of 1 million population. If you look at the left-hand side panel, Japan is this green line and Australia is this line here, looks quite similar. Both hands are second wave during the summer and they seem to have picked out. In cumulative number, Japan is located below Australia, which implies that Japan is less infected. However, of course, these numbers are also subject to health risk proactively government-provided virus test. The second figure is this tall here, this, which again, I'm pretty sure that you are quite familiar with. On your left-hand side panel, perhaps because of the time-run, there is no distinct so peek out as yet, either for Australia, no Japan. In cumulative terms, the this date 10, this is 10 here in Japan, in case of Japan, 10 per 1 million means that 0.001% is the date for Japan and if you go to the Australia, it is 0.003%. Both of them are quite low compared with that of Spanish influenza. Compared with number of which is 2.1% according to the balance estimate. Presumably because of the medical advance and the proactive lockdown measures and so on, at least so far COVID-19 seem to have less damage than Spanish influenza in terms of the human lives. That said, that is not without economic cost. I think that Australia is same, but real GDP of all of this advanced economy, more than what we have experienced, we experienced after the great financial crisis in 2008 or something like this. In case of Japan, if you go to the left-hand side panel, the real GDP shrunk in Q4 last year due to the hike of the consumption tax. In Q2 this year, the main driver of some sharp contraction are export and consumptions. Let me follow up how these two items are likely to evolve in Q3 by seeing that monthly indicator. First, export. On the right-hand side panel, monthly real export index, the latest number here is this one, is July, appear to bottom out. Although its level is still far below that of before the COVID-19. By destination, if you see that on the right-hand side panel, export to China, which is this greenery line, continue to rise or continue to increase and presumably reflecting that those of automobile export to the United States, recovered in July, after 50% drop, that's the worst. If you see that on the right-hand panel, the United States export becomes hard in a sense and go up in recent months. If we go to the consumption side, monthly consumption index stops declining and shows some recovery. This digs up here, which is most distinctive for durable consumption, affects the hike of the consumption tax. After that, it flies like this and it increases in June, although it softens somewhat in July, maybe due to the second wave. And the level again far below that before the consumption tax hike. Service consumption, which is here, remains particularly weak. Behind this consumption activity, what about labor market condition? The unemployment rate, which is this line here, HF in July, but its level is still quite below that after the great financial crisis. But if we add that those who take leaves to an iron point, which is this dash line, the spike, the rate spike just like the unemployment rate, which observed in the United States and it declined in July, all of it still higher than that before the COVID-19. And this number, I need to add that these figures hide heterogeneity behind it, which is, I believe, that's the subject of Professor Kitao's presentation. All in all, this quick review, review of the Japan's economy contracted enormously during the lockdown period of COVID-19. After these measures were lifted, the economist of declining and recovered somewhat. Although the activity level is still quite low compared with that before the pandemic and there is still a risk of double or triple dips depending on the third or fourth wave or something like this. And the active monetary and fiscal policy centrally support this development. If you look at the central bank balance sheet of the major advanced economy, these central banks balance sheet as well because of the various measures taken after the COVID-19. But if you look at in case of the Bank of Japan, its balance sheet expanded rapidly after the 2013, April 2013, because the Bank of Japan launched the Abenomics at that time. And at the same time, if you go to the right hand side of the panel, the fund IMF estimate government deficit will increase dramatically for all these economies. That is the first part of my presentation. And let's move on to the policy strategy in the era of the COVID-19. And the first thing I wanted to mention here is I think it is useful to divide this policy strategy to four stages. The first stage is lockdown period. During this period, we prioritized people's lives so as to prevent the catastrophic disaster. We needed to provide and we did in fact ample liquidity in order to sustain the economy. And the second stage here is post-lockdown period, but before the vaccine is deployed. At this stage, the authority cannot fully stimulate the economy because if we did this, if they did too much, infection of the COVID-19 would rise again. Instead of demand stimulus, we might need to take some solvency measures which I will come back soon. And the third stage corresponds to the period after the vaccine or drug against COVID-19 is deployed. That allows the authority to stimulate economy fully without risking another surge of the COVID-19. Then lastly, we can normalize policy measures, although I do not know how long it takes to reach this stage. At the beginning of the COVID-19 era, say in February or March this year, I used to think two stages, lockdown period and post-lockdown period, and predicted that V-shaped recovery. However, it became obvious that we need to take account of the distinction between play and post-vaccine period. And we are at the second stage right now. And specific to this stage, I would like you to argue that three issues, namely, probability of moving from liquidity problem to solvency problem. And second is deflation or inflation to come. And third are importance of the leading potential goals and the natural rate of interest rate. Then liquidity versus solvency measures. During the lockdown period, liquidity didn't matter because of the closure of the business activity. We need to cover temporary shortage of the revenue and income. However, as economic hardship continued, even after the lockdown period, then solvency, whether these firms and the household can pay back what they borrow, might increasingly matters. And what sort of measures can be taken against this problem? This table I borrowed from the IMF blog, and it's usually divided to these two categories here. And I hope you can read it. But under the liquidity measures here, you can see that so tax and the social security contribution differ or something like this, purchase of commercial paper and bond, credit guarantees here, and the liquidity provision for financial intermediary. In fact, so almost all of these measures are listed in this column here have been implemented in Japan. As for the solvency measure on the right column here, you see that so cash transfer and direct subsidy here, direct subsidy based on past sales. In Japan, so we have already deployed these measures to some extent, and as well as this one, subsidy for maintaining employment. In light of the importance of preventing hysteresis effect associated with our employment, which I will discuss later, I think it makes sense to take this measure proactively. Whether we need to further take measure like equity injection here and here to the business and the financial sector, depend on how the economy evolves and how quickly we have vaccine and or drug against COVID-19. Hopefully, we can avoid that situation. As in the case of the financial crisis admittedly, distinction between liquidity and solvency may not be that clear. However, from our experience of the financial crisis, I think it becomes clear that central bank can deal with a liquidity problem, but not the solvency one. After all, to end the crisis, we need to have a solvency measure like public money injection, which is in the hand of the government, but not the central bankers. And the second issue is whether we need to worry about inflation or deflation. Because the COVID-19 shock has characteristics of both supply and demand shocks, it is difficult to judge how inflation react to the shock. On this quote, as is often the case with economics, distinguished economists seem to differ in their opinion. And economists like Oliver Brunsch here argue that we should care about inflation, while veterans like Charles Gotthard tend to wonder about inflationary risk. As far as price development consent, inflation seems to have modulated, at least so far. And each of the central banks listed here revised downward its original inflation focus for year 2020 and 2021. Since Japan's inflation are excluding food and energy, who would allow 0%, I believe that so we need to worry about deflation, at least at the second stage. At the same time, given evidence that the Phillips Cubs have flattened, I also think that the inflation may not react much to the change in the track of the economy, as we saw at the time of the great financial crisis. And the third issue is importance of the raised potential costs through improving productivity. Among a number of economic analysis concerning the effect of the COVID-19, one study caught my attention is a work done by Jordan and others. As some of you may know, they also come back to the history of the European rate of asset returns since 14th century and find that so these rates react on average, like this blue line in this graph, after the major pandemic episode, including blackness, because we go back to the 14th century. The rate declined by about 1.5% on average over the 20 years, and another 20 years are required to come back to the original level. Since they use a trend component of these rates, so this is a bit technical term, they interpret this graph as the representation of the natural rate of interest, i.e., that's the equilibrium interest rate, which balance saving and investment of the economy. So to repeat that, so this blue line show that so natural rate of interest tend to go down after the pandemic, like this. And why this happened? Here I put here that so they are not now, which essentially say that the precautionary motive increased saving, but decreased investment, and that's the natural rate of interest required. However, I think that the most straightforward explanation is that because people die at the time of the pandemic, and labor input becomes scarce, and the capital input becomes relatively abandoned, that makes its return to the capital dimension. And using the same databases, they also calculate the reaction of the natural rate of interest after the major war, which is red line in this graph. It tends to go up rather than go down. This may be interpreted that so war kills lots of people, but destroys the capital at the same time. And because capital input becomes more scarce, its return goes up like this. Anyway, we do not necessarily anticipate that the natural rate of interest will come down by 1.5% point over the 20 years. I know that some other economists doubt robustness of their finding. And besides, as we confirmed at the outset, this talk caused by the COVID-19 is smaller than the previous pandemic like Spanish influenza. This implies that the capital input may become less abundant compared with those at the previous pandemic. That said, we need to worry about the situation. This is because the natural rate of interest of major economists are estimated have already declined to the very low level, like on this left-hand side part of. At the same time, the potential loss, which is understood to move broadly in tandem with the natural rate of interest, is also estimated to have a decline. This reflects a secular stagnation hypothesis of some us. COVID-19 may worsen this one. This is particularly worsen for central bankers because the lower natural rate of interest means that the less doing for maneuver given the effective lower bound of the nominal interest rate. This incurs two implications. First, we need to prevent potential loss from falling further. On that score, we need to take care about labor market conditions. This is because once temporary employees continue to have a difficulty with finding a job, their human capital deteriorating, and thus put downward pressure to the potential loss. This is known as hysteresis effect in the literature. For this reason, I think it makes quite sense that the government of the major economy have already taken some measures of supporting employment through subsidy as we saw as the servants and majors. Second, we need to raise productivity. COVID-19 has revealed how far we Japanese lag behind in terms of digitalization both for the public and the private sectors. At the same time, it has also revealed the importance of the flexibility of labor market practice, which enable more efficient remote works. These are known as long-term dues for Japanese economists. I hope the new government after the Prime Minister Abe will make double effort toward this direction. I will stop here. Thank you very much. So much for fantastic overview on the Japanese economy facing the COVID-19. Thank you very much. And also, I thank you for active participation. This is a good chance for you to ask your questions to the two giants on the Japanese economy. So now I can start my video. Okay. So thank you so much. And I would like to have a next speaker. So the next speaker is Sagiri. So Sagiri, are you ready? Yep. Okay. Okay. Please start. Thank you. Okay. So let me share the screen. Can you see it? Yeah, I can. Okay. Thank you so much for this great opportunity to present to such an excellent audience. And I visited you about four years ago, and I had such a fantastic experience spending two weeks there. And I always wanted to come back and participate, especially this Japan update, which if they kept talking about, but, you know, this time of the year, it's usually really busy with kids going back to school. And, you know, one of the very few silver linings of this COVID crisis is that I can now, you know, freely participate in such an event from home without too much hustle. So that's some, you know, good thing about COVID. So today, I'm going to talk about labor market and inequality. So after this excellent overview of, you know, the Japanese economy and the very distance in the world by Sekine-san, I'm going to focus much more on the labor market issues in Japan. Right. Okay. So, you know, the COVID-19 hit the world economy and then destroyed almost all the markets, including supply side and demand side of markets for good services in the labor. And then as we saw in one of the Sekine-san's chart, there is a huge decline in the GDP, which went down by about 80% quarter on quarter in the second quarter of 2020 in Japan. And I'm going to focus on the labor market and then also how, you know, this crisis appears to change the inequality picture in Japan. So you probably have seen these headline numbers. So unemployment rate went up from 2.2% at the end of the year to 2.9%. That number, you know, may not look so big compared to a huge numbers in the US or other countries. But, you know, still there's a big increase in unemployment. And also, you know, as Sekine-san mentioned, there was a big increase in the number of employed on leave. So there are, you know, numbers behind. And then there's a, you know, number of employed, which went up by about 25%, going up to about 2 million individuals. And then looking at the workers, real wage went down by 2% year on year. And then also workers are going down by 5%. So these are the, you know, big numbers that we are experiencing. But just looking at these numbers, it doesn't really, really tell us, you know, how big is the impact? And those are the, you know, how this, you know, negative effects are distributed across different types of people. So what I'm going to look at today is, you know, first of all, let's think about how unique this COVID-19 crisis is relative to other discussions that we have experienced in the past. So, you know, some people are more vulnerable to this crisis than others. And then let's try to identify who are the people who are more vulnerable to this crisis. And for this, I'm going to look at the data that details the micro data that we collect, you know, the government collected before the COVID crisis. And then let's examine what actually happened during the last several decades since the COVID crisis started. And then after we identify shocks by looking carefully at the data, we're going to think about, you know, the welfare effects and how, you know, this crisis affected the different individuals in terms of their consumption and also the welfare. And then after that, I'll talk about the policies in short-term, medium-term, and then also along that. Okay. So today's talk is based on some of the papers that I worked on with my super co-authors. Most of the talk, especially during the first part, will be based on this first paper, which I worked on with the Shinkiguchi of MIT and then Minamo Mikoshi of the University of Tokyo. And then I also take some statistics out of my work with Tomaki Yamada about the Japanese inequality. And then I may also talk about some of the fiscal issues that we are facing, which is the joint work with Seroimuro Hologuru and Tomaki Yamada. So first of all, in general, when there's a recession, who's going to suffer? So during the financial crisis or the collapse of the bubble, what's going to happen to the labor market? So there's a shock to the economy, income goes down. So what would you do? I mean, you're going to cut back the consumption. You may want to save more or maybe you can even save, but you have to adjust the consumption. You have to spend on food and clothes. That's something that's inevitable. You may wait to buy some durables, maybe the cars or the furniture, and you may wait to buy a house. So typically, when there's a recession, workers in the manufacturing, construction, real estate, and also financial sector tend to suffer more than workers in other sectors. It's also called a man's session because it's meant to populate these sectors more than female. And then also in Japan, there are different types of workers and then contingent workers. I'm going to explain this a bit more carefully later, tend to suffer more from a recession. So they have a job under a more unstable contract compared to other types of workers. And then compared to these regular recessions, what's special about this COVID-19 crisis? So when there's a recession, what would the government do? The government tries to recover the economy, tries to stimulate economic activities and increase interactions, right? But COVID-19 is totally opposite. We're going to have to suppress economic activities and then reduce the face-to-face interactions because the source of the shock is coming from the infections which go from the personal interactions. So in terms of the industries that will be hit harder, it's going to be very different from the general recessions. So especially social and also the face-to-face industries tend to suffer more like restaurants or tourism. Those are the industries that need to contract to prevent the infections. And then also in terms of occupations, even if you're working for a hotel or a restaurant, if what you do is checking the computers or working on the human resources, then you probably can continue doing what you have been doing. So in terms of occupations, there are occupations that are hit harder than others. Those are the ones that are hard to be done or completed from home. Or if the work cannot be done remotely and lack of flexibility, then these occupations tend to suffer more than others. And also very unique about this crisis is that it also hit a certain group of family structure and gender. And as in Japan and Australia, almost everywhere in the world, schools suddenly closed. And then there was a huge increase in the household and the child care duties. And then that falls not on everybody, but it falls more heavily on working couples. And then especially females who tend to undertake more household duties. And then also in terms of employment status, if the firms have to shrink, they're going to cut workers and they do so on workers that are easier to lay off. And then this is also the same as the regular recessions, but contingent workers tend to be suffering much more than the regular workers. So let's look at the first, what are the economic conditions of these vulnerable people who tend to suffer from this recession? So first of all, I'm going to divide all the industries into two groups. Okay, so first one is called the social industry, which include retail trade accommodations, eating, drinking, health services, educations. Those are the industries that need to shut down or shrink to control the infections. And then the other industries, I put them all in this ordinary industry. And then in terms of occupations, I'm going to divide all their occupations into two groups. One is called a non-flexible occupation or no working from home occupations, which include the service workers, manufacturing process workers, carrying cleaning workers, construction and mining workers. And then the rest flexible occupations include the management, professional, quality workers and so on. So I'm going to divide all workers into two by two and a total of four groups, according to this industry and occupation division based on the COVID-19 data. So this is the summary of the distribution and then also the earnings of each group. So we have an ordinary industry, social industry and then flexible occupation and then non-flexible occupations. So people are nearly equally spread across different cells. And then the percentage shows the fraction of workers in each cell. And then the numbers at the bottom, 5.4. This is the average earnings of workers in each cell. So you can see that there's a significant difference in terms of their earnings and which ones are going to be hit harder by the COVID crisis. That's the workers in this fourth cell at the bottom right, those workers that are working in the social industry undertaking non-flexible occupations. Okay, so those are the most vulnerable. So you can see that their average earnings before the COVID-19 crisis was 2.4 million Japanese yen, which is the lowest among the four and less than half of what the top cell is making, ordinary and flexible is making of 5.4. And then let's look more carefully at this distribution, looking by looking at this specification by employment type, gender, and also education. So let me say a few words as I promised about this unemployment type. So if I'm just talking to the Japanese audience, it's very clear. So there's a very clear kind of definition is subtle, but there's a clear division in the labor market between the types of employment. So it's not like a full-time and then part-time division in terms of hours, as people do in the US or other economies, but it's rather based on how workers are being called in the company. So the first group is called the regular workers. In Japanese, it's called the seiki koyo. And the second one is called the contingent workers, hisseiki koyo. It's also sometimes people call it non-regular workers or irregular workers. So the regular workers included regular staff and their executives. And then these people are typically tenured, so they're on a lifetime employment. They're very seldom laid off before they reached a retirement age, and then they are provided much more fringe benefits at work. And then they have almost guaranteed access to employment-based social security system. So that's a big difference. So Japan has a comprehensive pension, health insurance, and long-term care. And then if you're regular workers, most likely you get this insurance through your employer, and then through your employer pays half of the contribution for you. But that's not for everyone. So if you're contingent workers, you're much less likely to have this privilege. And then contingent workers include various types of employment, part-time workers, temporary workers, dispatched workers from an agency, and also contract workers, and all the other types of short-term workers. So they work typically on a limited term, and they get paid less, and the job is much more unstable. And then they're not always provided social security. So there's no clear legal separation or definition of this Seiki Koyo and this Seiki Koyo. But that's the definition, that's the division that you really have to understand and know if you want to understand the labor market dynamics that we have seen over the last few decades and then how inequality is changing in terms of the earnings. That's a very important distinction. But just to give you an overview, so this is how the number of contingent workers and regular workers changed since 1980s. So the regular workers, it's going up and down, but since 1995, it's falling. And then contingent workers, it's going up from 5 million to almost 20 million by 2015. And then most of the rise is coming from the female participation. So female workers are participating by more nowadays, and then most of them come to the labor force as a contingent worker. And then also there's an increase in the number of retirees who remain in the labor force, and many of them work as contingent workers. So sometimes you may hear that the contingent worker is a problem, but it's just an increase in the participation of female. But that's not always the case. So if you look at the picture carefully, the male percentage of the contingent workers is also rising, especially after 1990s. So it's going up from less than 10% to 20%. So there's a huge increase in the number of contingent workers in the past few decades. And then if you look at our earnings, so let's go back to the two-by-two picture that I showed you before. So this is looking at the workers by employment type, and then also, sorry, workers by the industry, and then also occupation. And I'm going to look at the statistics for regular workers at the top and then the contingent workers at the bottom. So as you can see, the average earnings is much lower in all cells for the contingent workers compared to regular workers. And then if you look at the vulnerability of these workers to the COVID-19 crisis, you can see that the contingent workers has much higher fraction of workers in this most vulnerable cell. So if you're a contingent worker, you're going to be in this bottom right cell with their one-third chance. And then if you're regular workers, it's only 14%. And then your earnings are much lower for the contingent workers. And let's look at the same figure by gender, so male and the female. And the female are more likely to be in the cell of a social industry and then non-flexible occupation. And then let's also look at the picture, sorry, the tables by education. So this is dividing workers by educational level. So the high-skilled group includes workers with at least college degree. And at the bottom, we have low-skilled workers or without the college degree. So if you have a college degree, your chance of being in this vulnerable cell is less than 10%. But that number goes up to 25% if you look at the low-skilled workers. So by looking at these pictures, and the vulnerability is not spread equally across different people. Looking at the inequality in different dimensions, the vulnerability is much more concentrated always on the weak end of the income distribution. So let's check how the actual data evolved after the onset of the COVID crisis, especially in the second quarter of this year. So for this, I use the official statistics level for survey and monthly labor survey in the first and the second quarter of 2020. Unfortunately, I don't have an access to the microdata or we don't have an access to the microdata. So we did our best to identify the shocks by different dimensions by examining the publicly available statistics. And then once we identify these shocks, I'm going to feed these shocks into some simple economic model to evaluate how bad the shocks are in terms of the welfare of different individuals. So we're going to have to translate the shock number. So let's say there's my income goes down, my earnings go down by $1,000. And then we have to evaluate that in terms of how bad the shock is to me. So if my earnings is, let's say $2,000, and if it goes down by 1,000, that's a big shock. Most likely my earnings are lower and then my assets are going to be depleted, my consumption is going to go down. But if I have a million dollars of income and a huge amount of assets, I don't really care about that kind of shocks. So not just looking at the numbers, but we need some economic model to understand how bad it is in terms of our individual welfare. So for that purpose, I'm going to use some very simple standard life cycle model, which include all the heterogeneity that we care about, like the gender, education, occupation, industry, and also employment types. So here's some data. So this is the change in employment based on the level four survey. So on the left, we have the number of employed for regular workers and the contingent workers starting in January or the way to June 2020. So COVID got worse in March of 2020 in Japan and then after that you can see that there's a huge decline in employment among the contingent workers that went down by about six, seven percentage point and regular workers also went down, but the change is not comparable. And then on the right, we have there a change in employment by occupation and also industry. So there are four types of workers and the green is the social and the non-flexible workers that are vulnerable to the COVID-19 shocks. So you can see that those are the workers that lost by most. And then this is the picture by gender. So after April, the female employment declined by much more than male employment. And then, sorry, okay, so this is another picture that show how employment's changed among regular workers and the contingent workers and also by age, right? So in this slide, I can show you a multi-dimensional picture. So I'm just comparing the change between the two quarters. So you can see that the contingent workers experienced a big loss compared to regular workers. And then the loss is much more concentrated among those in the 30s and the 40s. So it's not equal. And then let's now look at the changes in the average earnings that we have seen over the last two quarters, last five months here. So on the left, we have the changing earnings for regular workers. And then on the right, we have the changing earnings of the contingent workers. And then it's comparing the earnings of the in the social industry and then the ordinary industries. So regular workers earnings, it went down, but the change is not that big. But if you look at the contingent workers earnings, it's declined by much more. And then especially the change is large in the social industry. So that's the summary of changing the data. And then now what we are going to do is to evaluate this change in terms of how bad the shock was in terms of welfare, right? So we're going to quantify the welfare effects of this change in the employment and the earnings in a small economic model, okay? So the way we are going to evaluate the welfare loss is in terms of the change that we're going to have to make in terms of our consumption over the life cycle, the remaining life cycle. So let's say I'm hit by the COVID shock. And then if that shock is really bad, then I'm going to have to adjust my consumption. I'm going to change the consumption today a little bit, maybe tomorrow a little bit as well. And let's sum up the dropping consumption that I'm going to sacrifice because of this COVID shock. And then I'm going to sum them up and then compute the present discounted value of this required changing consumption. And then express that change in terms of my average earnings prior to the crisis. So that way we can evaluate how bad the shock was for me in terms of the consumption that I really care about. And then also express that as a relative size to my earnings. If that number is, if the change in the consumption is big, maybe that's nothing relative to my earnings. And then we don't have to care that much. So that's kind of how we interpret this welfare number. So to do this computation, we're going to have to make some assumption about how long the shock is going to last because we only have data for the last couple of months. So we do different scenarios, but in the baseline scenario that we're going to talk, I'm going to talk about, I'm just going to assume that the shocks are going to fade out in about a year on average. Okay, so let's look at the welfare loss of this COVID-19 crisis in Japan. This is the table that summarized the result for gender. So not surprisingly, females are going to suffer by much more than males. So this is about 4 percentage point in terms of their earnings that they're going to have to sacrifice from the COVID shock. And then by employment type, there's a huge difference between the regular workers and then contingent workers. So contingent workers lose by 8%, whereas the regular workers lose by 2%. And in terms of education, low skilled workers with lower education level, they suffer by much more from this crisis. And then also in terms of the occupation and the industries, you can see that the workers in the social sector and then engaged in the non-flexible occupations are going to lose by much more from this crisis. Okay, so that's the result from the economic model. So just to summarize, so the vulnerability of the COVID shock, the shock is really bad, but it's not the, I'm not ending soon. Let's still have time. Okay, so. Don't worry, don't worry. Just a few more, just a few more slides. Please God, you have your time. Sorry. Okay, all right. So the vulnerability of this crisis is not at all spread equally across individuals. Of course, everybody suffered, right? So I have to take care of my two kids staying at home at the same time as teaching my regular courses and advising at home. So that's a huge suffering, but economically, I'm not hurt at all. So I have a job and I'm being paid, but some people are not. So there's a huge difference in terms of, you know, how the shock hits the economy and the different types of people. And then the early data that we have examined show that clearly, you know, it is hitting people who are at the lower end of the income distribution. And then if you want to ask, you know, whether this shock has increased inequality, it appears that the answer is affirmative. Yes, it has increased inequality. It is increasing inequality, at least in the short term. So if you want to identify and name who's most damaged from this COVID crisis from the early data, those are the workers that are engaging the contingent jobs in the non-flexible job and in the social industry. So that's what the data tells us. So in terms of the policy, so if you buy, you know, after we look at these data and then the result, you know, who do you think the government should target? It clearly says that the government policy should be targeted to these affected households. And then, desirably, the targeted transfers are so much better than the lump sum payment to everyone unconditionally. So, you know, but that's not exactly what the government did. We did receive their unconditional lump sum transfer of about $1,000, right? So, you know, government could have done better if they had the information about who they should reach. Of course, you know, this policy would require that the government has their timely access to individual data and then the ways to reach them, but they didn't. So that was the problem. But, you know, the data shows that the government should have done their best to reach those who are hit worst by this shock. And if, you know, the government has a huge amount of asset and there's a fiscal room, then they could have done this lump sum transfer and then they can keep on doing that. But of course, as everybody knows, Japan is not in that situation. Very limited fiscal room. And given the current spend, you know, fiscal situation that we are having, then the spending program, if they need to implement, should be at least considered carefully to do the math. What is the cost of doing that? And what, you know, what's the most efficient way to reach the most needy that needs to be done. And then in terms of, you know, how this shock is going to change the inequality in the long run or the medium term, that's very, very hard to say. First of all, we don't know how long it's going to take for these infections to go under control. And then whether the economy is really going to go back to where it used to be, that's also a big question. It takes a lot of time for the supply chains to recover, you know, supply chains to recover. And then demand may not come back to where we were. Okay. And then also, you know, I divided all the works based on the non-flexibility and the socialness, but all these definitions are also changing. Like one year ago, I would have imagined that I'm teaching from, you know, from home and then giving a talk to or the Australian audience online, which is a luxury, but that's something that's also changing. My kids are working hard from home remotely. And then everything seems to be changing. And then especially, you know, the medical, the way that medical services are provided is also changing. So that might give some, you know, good change to the Japanese economy. So that's also something, you know, we have to monitor in predicting how, you know, this shock is going to change the long-run inequality. And then if there's a change in the industrial structure, then it also, you know, how inequality is going to change also depends on how workers are going to move to different jobs based on, you know, the need and also supply and how the government is going to implement the policy and how individuals and the firms are going to respond will also affect how inequality is going to change. So there was a discussion about the current policies in the previous presentation, but in the medium term, if this, you know, the situation is going to last, rather than providing assistance to the people who remain employed and don't leave, maybe the government should, you know, at some point, try to switch to encourage module creations and then work on mobility and the recovery of individuals capability to earn. As Nesan pointed out, you know, there's, if you keep just workers on leave, then their skills are going to depreciate. And then if, you know, maybe they're losing their skills permanently, if the industry is not going to recover. So they would have to transition, you know, from subsidy to employed temporary business closures or payments to workers on leave. But, you know, at some point, they're going to have to move to assisting necessarily closures or perhaps switches to new businesses or maybe provide some subsidies for job creations and trainings. And then, you know, by looking at the changes in the quality, not just from this crisis, but also, you know, from the, you know, how the market responded during the financial crisis and other shocks to the economy. You know, this really revealed that we're going to have to eliminate the gap between the regular and the contingent workers. And we're going to have to include the contingent workers into the same common social security system. Those are precisely the workers that need more insurance provided by the government, but currently now are being excluded. So that's really important to include them. And then there's also a lot of inefficient and outdated rules in the social security system. For example, there's special exemptions on the social security contribution for dependent apologies earning below the thresholds. So that's something that, you know, should be also eliminated in the long term. And then in terms of the fiscal situations as well. So existence of this contingent workers who are making much less and then their whose employment is much unstable. That's really a time bomb for the Japanese government in thinking about the fiscal situations in the future. They have much lower savings and then once they reach the retirement age, they have not, you know, contributed enough to the social security system. People live long in Japan. So, you know, how they want to survive. The government would have to provide a huge amount of money to sustain their lives. So that's also another, you know, agenda that we're going to have to work on. Okay. So that's it. Okay. Thank you very much, Takeri, for another fantastic presentation. You know, what the nice research, what the nice and the detailed of the research, we need a this type of the research to identify who are really, you know, facing a difficulty under this COVID world. So please join me thanking two speakers for fantastic presentation first. Then now, I would like to have a question. So still we are happy to have a question. We don't charge you anything for asking a question. So if you have any question, please do so. And first, I found the names of my colleagues at the ANU. So the Ligansson and the Warwick Machivans. Can you hear me? Oh, thank you. Yeah. Thank you so much. So please, please start your question. Thank you very much for a fantastic presentation. My question was for Toshi. And Toshi, thanks for taking over program directorship at karma. It's great to have you on board. My question was your estimates of what might happen to real interest rates in Japan is very similar to the working paper that I did with Roshan Fernando where depending on the scenario, depending on number of waves and the policy responses in Japan, the real interest rate could fall between 0.7 and 1.2, 1.4. So that's very consistent with your discussion. What I think is really interesting is what might happen to productivity growth. We know that before the crisis, people were talking about the move towards singularity and that all this new technology was there, but no one was using it. Why haven't we seen high productivity growth? So it strikes me a plausible scenario is that this technology gets taken up in many different countries and you do get a surge in productivity in the future. Now that will drive up real interest rates, as you argue. Are you concerned that the increase in real interest rates may actually be bigger than the increase in growth from the Japan's perspective? And therefore, you're in a very precarious situation because there's a trade-off between higher R and higher N. And I think your prescription of high productivity growth policy in Japan is very important because even if you don't get the productivity surge in other countries do, world real interest rates will rise and that is a situation you don't want to be in in the recovery phase. I appreciate your comments on that. Okay, may I? So yeah, please. Yeah, thank you very much so for your great question and I would say that so I don't have so quite clear answer to your question, in fact. But having said so, my quick sort toward your question is something like this. So if we think that so some technological progress is not really happening in other countries, other than Japan and these countries natural rate of interest is much higher than that in Japan. So that is a kind of situation you imagine in your question. And if that is a case that so I would say that so well, if it's a case and also that so if that's the bank of Japan keep that so interest at quite low level then the presumable way what would happen from is capital outflow from Japan and the presumable way people try to go out from this country and which means that so there's so exchange rate becomes weaker for the Japanese economy. And I thought before that so that could be one scenario which might so close so the end of the deflation in Japan. But the reason why I said that so I didn't have quite good answer to that is well, even though I imagine in the past something like this scenario but it never happened in a sense. And because of the home bias which is I don't know why it happened but because of the stubbornness in the Japanese investor always we are talking about Mrs Watanabe or something like that there's nothing such sort of dramatic depreciation of the currency and in fact that's what happened in the past, at least in the past is everything happened then Japanese game appreciate rather than depreciate because of the safe heaven currency or something like that. And that part I don't have any specific story behind it but my so brief answer to your question is if that's a natural rate of interest going up to other country then I would say that's naturally we need to see that's some sort of the depreciation of the currency that must be some adjuster between that so country or global economy. So that is from my side. Okay well is that okay or do you have any additional questions? No it's just a quick I guess the key point here is how the capital markets adjust because in the end you think the natural rate of interest would be the same around the world and so that's the way the world seems to be working it's certainly been the experience over the last 10 years really just rates are low everywhere including in Japan so that answered my question no thanks Toshi. Okay thank you very much Rigan are you ready or not? Not? Yeah okay can you hear me? Oh yeah yeah I can hear you now. Okay yeah thank you so much for the Toshi for your presentation and I like this very much in one of the slides you will see that there's three or four stages and towards the end you will quality the normalization the stage on the normalization I think it's a big issue and a big same we know that the COVID came 10 years after the GFC the global financial crisis and in responding to that crisis you know Fed and other European Central Bank in Japan also adopting those so-called unconventional monetary policy and the Fed in someone three or four years after GFC they try to reverse and that other policy because this is a very unprecedented implementing such an unconventional policy and then the COVID came and when the COVID came occurred it's doing the same thing again so therefore the normalization in what sense are you suggesting that you know to normalize the monetary policy and the question is that how feasible you know not just Japan but also including Europe including the United States to be able to unwind those are unconventional policy moving towards some kind of a normal setting and for the time being and so I thought it's maybe very difficult if you are talking about normalization of a monetary policy thank you thank you very much for a great question again and I would say that so I use that the word of normalization of the policy not necessarily mean that so monetary policy of course it's including a monetary policy but also that's a physical policy as well because it's as indicated in the slide that's so because of the COVID-19 thing that's so because of the the physical side of the stimulus which is adequately taken the debt burden is enormous and that is some sort of the subject that so Kitawa sensei mentioned as well and my sense here is it going to take a very much long time to to to to to to shrink this so government debt as you know that the Japanese government debt is already quite high level but it goes on farther and and and maybe it's going to take quite some time to to to to Canada first of all to the much more moderate level or still higher level high level but but manageable level in a sense so so that's the process the first process for the normalization and and I would say that so because this is the physical side of the story I didn't have much specific so comment on that but one of the things that so I I'm personally think makes sense is why we cannot create that so special account or a school account for the the the the the government so the balance it like we did in after the great so earthquake great east east japan earthquake we made a special account and and and because of his go so burden was enormous at the time and we didn't graduate from the special and and maybe this might be the case again then why we cannot make that special account for the the cobit 19 things and and as kitao sensei mentioned that so since we had this pass lots of money across the board and why we cannot so get back some money from the wealthy guys and and presumably we can use utilize that so income tax or something like that rather than consumption tax you did to close the gap for the for the the the the this special account so uh dead burden so so that's the number one thing but even though it's going to take quite a lot of time and during that time presumably uh unless we observe that so inflation is quite rapidly going up then presumably the the the central bank need to to keep the interest is quite low and it's going to take another many so long time uh i don't know how much how long we're going to take but after we see that so some sort of so fiscal side of the the the economy is becoming a little bit much better shape then i think that's what we need to think about that so uh why we cannot normalize the market before say that would be quite long process so that's what i mean uh that's for the age and thank you thank you very much okay so that okay so while the panelists are answering two questions we have uh 12 more questions so that let me speed up the the process so that let me read the question so that i have an interesting question from motoko rich you know hello i have a question regarding the most vulnerable category of the workers kita sensei you identify woman in social non-flexible jobs how many women and in in those types of jobs by choice as opposed to having an accommodate their husband brutal work hours yeah in other words women go into these jobs because they have to take care of the housework and the child care and can't commit to full-time regular jobs so that sagiri could you answer to this question sure yeah that's a great question i don't have the answer to that i mean i want to ask uh you know those are a lot of women in their contingent jobs if they really want to uh you know running a job that is regular but i think uh there is no such option once you go to the contingent job so if you look at the mobility between the contingent job and then then the regular job there's almost a very very small probability of going from contingent jobs to regular jobs and then also as i mentioned there are lots of regulations that essentially is a huge tax on female workers to go back to regular jobs or even the contingent jobs so there's a certain threshold above which you're gonna be no longer dependent on your husband and that contributing to the social security system the threshold right now is about 1.3 million japanese yen so unless your earnings go above that threshold you're gonna be dependent and then you're gonna be exempted from making any contribution to the social security system and then receive the all the benefits and then that kind of you know system is extremely inefficient and then excluding a lot of women from participating in the labor force and then i talk to politicians some people are also asking whether our kind of research is really changing the policy or how we are affecting the actual policies and then politicians seem to you know recognize that it's such an inefficient and it's also inconsistent with the you know what the government seems to be trying to do they're trying to encourage more women to work more all the people to participate there are but there are so many you know small inefficient regulations that are embedded in the current social security system so those are the things that can be removed and then see how women are going to respond to the change and then that may partly answer your questions but since there are so many all the different factors including the rules it's very hard to tell you know whether the women working in these contingent jobs are really happy or not okay thank you very much so i have again so many questions you know it's great to have a lot of questions and uh this is a question to to panelists so that maybe i would like to combine that together about the that sustainability okay so that i have a question from Lydia i'm interested in knowing more about the potential reforms that Japan is considering to improve the public pension system particularly in light of the predictive increase in social security spending may not be that much to do with the covid but the you know covid situation definitely makes the budget station worse and i have a question from Alex could the panelists talk about the japan's debt issue how serious do they consider it to be and how should it be dealt with so that so that who'd like to start Toshi or Sagiri okay maybe the Toshi can i let me just well because uh sustainability that sustainability is a kind of subject of Kitawa sensei is much more so uh so professional because i'm just a center worker so anyhow debt situation is quite serious as you know and and the debt sustainability is always the issue but having said so well so far that's so lucky enough we don't have seen that so that's so same happen in japan as yet and and i think that's so one of the issue is definitely related with the question here is raised as a social security system that is a kind of so huge social that that the government deficit in in in japan and definitely there is quite so big need to to to to to to to to to deform uh not only the social not only there's a pension but also also health insurance so this kind of thing as well to to cope with that so the the democrat factors and one of the things which i mentioned before is well just think about it so japanese become biologically become much more younger than before while we cannot so increase much more flexibly raise that so retirement age or these kind of things and just try to if others so the timing of the pension payment to the extent possible in mind with the biological health in the japanese so ever the way that is a one thing and the and the and the definitely that is a kind of thing that so we need to to to have in japan so that's my answer yeah sorry before the sake and i got the similar question from green door if i pronounce correctly so that i was wondering whether the japanese economic recovery funding will add more dead which already at the staggering number at the moment could you tell us if there are any fiscal rule that the discipline japanese debt policy thank you so it's related question so that sagiri could you sorry i'm not summarizing in a nice way but i just asking you to answer everything that could you do so okay can i share one slide that i had you can see it yeah i'm i can't so this is one of my backup slides i was i was expecting that somebody may ask that question so this is some predictions about the government to deficits that i had computed based on pre-covid data so this is not including the debt that we would increase we will be increasing you know and have by the end of the year so you can see that you know in here i'm just assuming that the current system is not going to change at all and then just using the predictions about the japanese populations and as sikinesan correctly said you know it's not just about the pension but also the health insurance long-term care and then the interest payment here i'm just assuming that the interest rate is going to remain at one percent in real terms so pretty maybe pretty optimistic assumption so it's a huge issue that we are facing and then how can we solve this problem i don't think we are seriously facing this problem either and you know sometimes government to hear that so this is a percentage of expenditure divided by gdp so there this increase in the deficits is going to be wiped we are wiped away if you can increase the denominator right so gdp goes up if there's a miracle increasing the productivity and output then we can you know be happy but that's not something that we have seen over the last few decades so we cannot and should not keep dreaming about this growth miracle to happen so we have to face this and it's a very tough question i don't have the solution but one you know thing that we should look at is where's the room to increase in terms of the gdp and then also the contribution to this system i would say that you know reducing the pension it's it's you know something that we should think about but it's very difficult almost impossible to talk about as a politician i mean all the people don't like the idea and then uh who's going to vote it's the old people in japan so it's very hard to think about that so we have to think about how we can do what we can do about the denominator so we did i have a paper with my co-author minamon mikoshiba how the female participation can change this picture so the more you know encouraging participation is really important but if you just increase the number of female workers without changing how they contribute to the labor you know market it's not going to change the picture at all so just increasing the number of participation like what happened during the past decades that the prime minister seems to be very proud of that's a great achievement but you know you have to look at what women are doing as some people asked before so if you can also change how productive and how you know much each woman can contribute and the way they are included in the social security system making them contribute making you know let them accumulate in a human capital as a male dude then that's going to change the picture so that's one thing that I think we should consider okay thank you very much so I have two questions from Stuart Nixon the first one is maybe for Toshi so the he thinks the stage two could last longer oh sorry I'm okay stage two could last a long time so that what role do you see for measures such as safe operating procedures and programs to encourage digitalization and policy that reallocate resources away from pandemic incompatible activities rather than lock in a status quo so that may be the question to Toshi and a second question is is to Saagiri so he's wondering if emergency service workers healthcare professionals and a police fire ambulance are included in a social and a non-flexible and then whether the difference would be even greater if these were excluded so that could you answer to these questions so the first Toshi could you answer the maybe the changes in a social norm and maybe the policy to encourage that how it's effective could you answer Toshi yeah well first of all I totally agree with that so this stage two could be much long lasting than what so we hope to in a sense at this stage at least that so it's going to be taking well who knows that's one that so this vaccine or this kind of thing can be fully deployed although that's so there's a lot of media talk here and there so but in in a sense that so during that field one of the things that I mentioned is we need to to sustain the economy by taking care of the service issue this kind of thing but at the same time so what I try to do to mention here is also that so we need to think about that so how to reallocate the resources by something here but but not to to that that's not that's not necessary mean that so the bad guy need to go out immediately something like this well that is a kind of thing that so people might always talk about that so hey we need to to encourage zombie companies should go out and in order to do that we need to base interest now something like this that's sort of nine of that argument is sometimes I've had but I think that so it's a kind of so bad idea in your sense whenever we see that so the the unemployment is so becoming higher then we given that so labor mobility is not such great then I would say that so that's sort of so get closer to the zombie company would be not kind of an issue that so at the stage two as yet we hope that so we can do it after that so stage three or stage four but at the stage two what we can do is much more I mean it's positive sense that so whenever we see that so this industry or this company seem to be much more have potential then why we cannot so get the money to these guys so so that's the kind of thing that's what we might be able to think about but not to intentional to close down the bad guys so that is not the issue of the stage two so that's my reaction thank you thank you very much so that okay before asking the that the second to answer to the second question but I found that another related question to the first one so it's coming from our kentaro asai I'm expecting some positive shocks because of that oh it's moving it's moving sorry because of the transition from the traditional japanese working style to the one utilizing remote and a virtual communication which should save a lot of time for workers if any could you please kindly share your view with us in terms of long-term structure impact on the surprise side of the economy so that certainly could you first answer to this question and then I would like to ask you to answer to the question about inequality impact to the social and yeah no flexible workers yeah um I'm not sure if I got the first question correctly but it's it's talking about their question about their essential workers it's it's hard to know you know the economic conditions of essential workers so it includes you know doctors who tend to be paid more and then also you know those workers who are you know in the in the working in the in the grocery stores for example which remained open so we at some point we excluded we made the third category of essential workers but that didn't really influence the picture that and the main message that I had so you know I don't have a clear answer to that unless I look at the data once more and then another question about the teleworking and then maybe some positive side about increased job flexibility that may remain you know more permanent after the COVID crisis yeah that's yeah some hope that we can expect I think there's a study by Michelle Trotilt and the Mathias Stofke who look at the you know how the female labor force participation is going to change after the crisis looking at the U.S. data so it's you know if this flexibility of work is going to remain even after the COVID crisis that most likely is going to work more favorably for women who need you know more flexibility and the balancing of work and also at home so hopefully that's going to change you know how especially women contributes to the labor force but that remains to be seen really okay thank you first and I have the similar question from Cristina Magnus Hawkins so that I think yeah so it's already answered so that I would like to go to the question from Yalin AX7 I hope I'm pronouncing correctly so that I have a question about I have a question to the panel so that I I have a question about the process of recovery after the pandemic right now it appears that the general mood about the government the competency about hunting the COVID-19 pandemic in Japan is largely largely in the negative side do the panel to see this this last this last this this illusion meant translating into negative attitude about the ability of the government to restart the Japanese economy after the crisis and if so how would that harm the process of recovery so it's maybe a general question about people's trust on the government policy and they're given such circumstances what the government can do so that a tough question but I'm sorry as a former boss can I ask Toshi to answer this question yeah this is a well I well if I were still that the bank of Japan guys I never respond to that sort of question but still I'm not so the that sort of pardon anymore so well let me just so talk about what let me just respond to this kind of so difficult question to I must say well I would say that so yeah in a sense that so people feel quite a disappointment or sorry feeling regarding how the government handle the COVID-19 thing which might be not necessarily that so reflecting fairness or something like this but but people feel that so well then government so measure is not so in time or something so that's sort of saying is atoms for the area I don't deny and and I think that so well if that is the case then why the new prime minister can expose this opportunity in a sense so a new leader just coming into the new the picture then he might be able to say that so I want to to to change the process a more rapid way and and I want to to to utilize one digital technology or this kind of thing and so that is a kind of so good opportunity for for the the government to change that so the atom squad of the general public I know that so it is quite difficult but but presumably if that's a great statement or petition there is selected I hope that to the prime minister then he might be able to do it so that's my presumably optimistic reaction to the question thank you very much and maybe that I would like to have a circuit is answers but maybe that it's maybe that I have a question related to to more to the field so that what the initiative is government is considering to help the economy recover and in the process help create more employment so this is about the government policy can you think about any effective government policy to promote more employment or do you have some idea that government is already trying to implement policy to increase the employment I don't think the government is focused on creating more jobs or starting up a new business that might be more needed under this under or you know during or after the COVID-19 they're much more focused on keeping the firms alive and then workers in the current jobs and that these policies are good as long as you know this pandemic it's not going to last more than a few months and then the economy is going to go back to where it was so it's just a temporary thing that we're going to have to wait but at some point we're going to have to make a judgment if the changes that we are seeing may be more permanent in that case you know rather than keeping the same industries or the workers in the same jobs they may you know switch their gear and then make the transition to new jobs or you know facilitate more mobility of workers from a particular industry to another industry so that's something easier said than that I mean if there's a technology development and then there's you know for example like in the US there's a polarization going on and then the middle class is tanking then why don't they just move and then they should the government should make a provider you know the training to move but that's very hard to do so you know during the transition probably the government would have to do the both things to keep the workers you know life and providing maybe unemployment insurance or the current style of subsidies but at the same time you know they should also switch to more proactive policies to you know stimulate job creation and new industries but that's something that we have not seen I think okay thank you very much so that okay so we are with the running out of time but I hope we could you Toshi and Sagiri could you stay a little bit longer although we can pay anything to you but I hope you could yeah if you say no that's not the good good you know image for you so I hope you could stay a little bit longer so then I'd like to go to the next question so then my question is the professor Kitao does COVID-19 have any impact on immigration or foreign employment policy and the situation in Japan I heard that that Japan has attracted the many foreigners to work recent years in preparation for the Tokyo Olympics I think if Japan can hold the Tokyo Olympics successfully will it be a great help to the job market so that could you answer to this question so I have not seen the recent data about the foreigners inflow and outflow so I cannot answer to that question but given the shortage that we are going to face not just now but you know over the coming decades we're going to have to you know rely on and the count on foreigners that's my opinion but how they're going to be integrated in the Japanese labor market that's a big issue so there's a huge concern about you know if there are more foreigners especially in the lower skilled industries or the occupations they may crowd out the Japanese workers and then change the wage structure and then exacerbate the inequality so that's something that we're going to have to keep watching but given the huge decline in the labor force that we are destined to experience I think you know we should be more proactive in attracting you know foreign workers into the labor force not just in terms of the economics of course but there are other things that good things that we're going to have to consider thank you very much and this may be a question to Toshi I think we already covered this question but this is a little bit more specific could the panelists please talk about the impact of COVID-19 or e-commerce are we seeing a shift in a business particularly a small SMEs to digitalize and go online will e-commerce be an important factor in Japanese economic recovery I'm sorry maybe you must maybe answering already have answered some question but do you have any specific answer to that question Toshi please yeah definitely so presumably one of the things that so we need we can anticipate it's so presumably because of this kind of so thing happen while e-commerce can be much more so be used in day by day business although that's so there is some study that's so after the COVID-19 that's so not elderly people coming to this so e-commerce world rather than that youngsters just coming to utilize more in a sense so how long are you going to sustain is still questionable as yet but I think that's so the direction is quite clear that's so presumably Japanese to utilize much more so this e-commerce so this kind of thing and I think that this is a part of the story that's so productivity will come up by exploiting that so this digitalization of the new technology what is kind of saying because we are still not behind peer country so so that's that's my response thank you very much and okay so I have a question from David Law so that a question for Kitao-san so you mentioned the need to animate the gap between the employment arrangement for regular and the contingent workers how should this happen oh moving so how should this happen by regularizing the arrangement for contingent workers or making regular workers arrangement more flexible also how likely is this sort of reform to occur another tough question so but if you could answer as much as you can please that's a great question the government I think is looking in that direction but there are so many things that you're going to have to overcome for example the regular workers typically they get the job right after the college graduation and then they're going to remain employed in the same company until they retire right so the job change frequency is very low it's good for those people who landed in this safe jobs but you know if not then you have the scarf for the entire life because of lack of the mobility between the you know the regular work and the contingent job so for example for those people who got the who graduated from college during you know 1990s or you know before 2000 when the economy was tanking their scarf is set to remain so those people who are in their 40s or 50s they still suffer from this you know the bad luck they had when they graduated so this should not be repeated you know after the this COVID so those people who graduated last year probably have the totally different picture from the ones who are going to graduate to this year so the government you know I think recognize that but we need to have more proactive action to increase the mobility for example maybe they can implement a policy so that they're not going to ask the age or even gender when hiring the workers it's you know easier to say that so we should increase the mobility but there needs to be some proactive actions to you know implement that thank you very much Adena I would like to go to the question by Jenny Corbett so that you know our friend old friend the Toshi and myself so the question is so this is the question to you both but the more maybe the more more to Sagiri so if Japan's inequality is still relatively low by international standards we all feel intuitively that the more inequality is bad but we also don't expect to eliminate it completely so there is a question about what it what it is appropriate for policy to do in normal times and in the crisis times do you have a view about whether Japanese policy was addressing inequality appropriately in the absence of COVID also do you have an explanation why have it changed the policy from what would have been appropriately targeted to lump sum we know it is political but what would the political objectives of those who push the lump sum so that's okay that's a big question but okay so I would like to maybe the question is whether you know in the normal time Japan should eliminate eliminate the inequality more and what could be done particularly in the crisis timers of now so maybe Sagiri would like to go first oh sure yeah that's a great question I wish I had a clear answer for that but the inequality is something that you cannot ignore like inequality caused political instability that we have verified everywhere across different countries so politicians are paying much more attention to inequality like even in the monetary policy like Jackson Hole I think there was a lot of discussion about the inequality so that's something that you know the government cannot ignore and then I guess I'm you know up until maybe several years ago the government did not pay much attention to you know what's going on in inequality but rather much more focused on the aggregate numbers and growth but nowadays I think it's changing and it's a threat to the fiscal situation as well if you just leave this inequality you know people who are in their 40s and the 50s there's a huge increase in equality over the last few decades within these cohorts and then once they reach the retirement age that's going to they're going to pose a you know huge fiscal burden and then if you have to raise taxes that's going to you know shrink the macroeconomy so that's something that's going coming on in the next you know maybe 10 years or 20 years if you just leave it as it as it's so that's you know what the I think government must pay attention to thank you Toshi do you want to add some something I would first of all Jenny since it's thank you very much for this great question and I would say that so well maybe what you smell what you try to mention is something like this that's so presumably in case of Japan because lower in quality is coming from the top guys payment of the salary payment or some sort of incentive or this kind of thing is much lower than other country and and if you try to to go back to this so this top 1% of for top 0.1% income thing then Japan's is really egalitarian community and I would say that's so well presumably we need to focus in quality issue regarding what Kitano sensei mentioned that's so for instance that's so female workers who know the pay IDK of the way they must be single mother that sort of thing is definitely we need to have rain that's so that's sort of people to go up to the ladder but at the same time we need to a little bit think about in the Japanese society that's so why we cannot so go up to the ladder I mean that's so talented guy can get much more higher some way and and and that's gonna be incentivize incentivize that's so some sort of so much more innovative activity or this kind of thing so so on that school that's so presumably there must be something that's so well not so simply say that's so inequality is bad thing but rather than that presumably we need to to of course that's so there's a standard that people life and to try to to make these guys send the very so normal right but at the same time presumably we might a little bit think about that so flexibility regarding that so top guys can go up a little bit more so so that is a kind of thing that so we might be able to think but I don't know that so which kind of government measure can do it because this might be much more cultural I think might be there as well so that's that's my reaction thank you so much and are we answering almost all are the kind of that almost cover all the question that except the two so I'd like to ask a last two questions so first is the Malcolm who is in London and he suddenly needed to cancel the travel to Japan so then you know I'd like to answer to his question so that he mentions you know what has been the impact on the Japanese tourism industry and what are your thoughts about this in the short and the long term maybe Toshi could you answer first your view about the tourism industry it's really difficult to predict at the moment but if you have some view it would be great if you could share with us well I think that's so this is a typical story of the sort of the issue that's so well the tourist industry now has a great difficulty because of that so there is no inbound tourists in coming to Japan so there's a quite big problem there and the presumably government can sustain some of these guys and and what try to to save these kind of people and and if there is some some sort of sort of an issue these people might be saved for for to some extent I would say this is because that's so well after all we hope that so stage three is coming in the future then presumably at that time this inbound tourist or this kind of thing is coming back as well again so as I mentioned before that's so we don't know how long we're gonna take but at least that's so we can hope that then why we cannot sustain this industry to the extent possible so that's my my reaction thank you very much do you have something to add Sagiri to this question um no okay yeah okay okay so then I'd like I'm sorry I cannot cover all the question but I'd like to have this as a last question final question so that that's coming from the Lachlan pit I hope I'm pronouncing correctly so thank you both Tosha and Sagiri so much for the talk there are any actions or even discussions taking place regarding targeting fiscal suitability to the groups that need it the most not just the money but the perhaps something like a subsidizing or completely funding training or education which would help individuals in these groups move into more stable and less vulnerable jobs so that maybe this is maybe the question to be answered by Sagiri could you could you answer ah sure yeah so it's great question similar to somebody the question that somebody else asked so that's you know data clearly tells that's really the action that the government should take but I guess the big question is how the government can clearly identify who they should help and then how much transfer they should give and then how to reach them so you know one of the things that really was revealed from this Covid crisis is that government lacks information about individuals they don't even have you know correct information about how much people are making last year and then how things change that this year so that was you know something that the government could improve in accessing I mean there's also a trade-off between the you know the efficiency and also privacy but even if you sacrifice some privacy that's something that you know the government has to seriously working on as some people were asking some people were asking you know the new government seems to be more eager to work on this digital issues which I hope will include you know collecting right information about the economic conditions of different people so once they have that information that's definitely the policy that should be taken but for now I don't think the government has a clear at least as far as I know a plan to make transfers to you know these people but for some industries for example the tourism is the most badly hit by this crisis and then they implemented some policy to give some subsidy to make you know the tours to different hotels and you know the tourist places but you know that happened when the infection number of infection was rising so that policy was also very much criticized but that kind of policy might be effective if they could identify you know which sector is you know more than hardly hit and then I think they have a way to target the people that'll be great but at this moment I don't think they have a way to reach the most needed in a very very efficient way okay thank you very much so we have a more question and I'm sorry I cannot handle all the questions and maybe my handling the questions is is incomplete I'm sorry for that and it's it's really difficult to to check the questions in a small window so this is just an excuse but I hope you you learned a lot from two experts on the Japanese economy so that and so this time it's a virtual but in the future I want to have Toshi and Saigiri together physically in Kanbara to present that Japan update a very near future maybe a next year or maybe in two years I hope the things is getting better so that and first of all thank you very much for for participants to to be involved in the activity discussions and last but not least that please please join me thanking two fantastic you know colorists you understand what I said at the beginning is it's true you know they are truly distinguished fantastic and the best speakers for this Japan update so that please join me thanking Toshi and Saigiri for fantastic presentation and discussion thank you very much thank you so much Shippei and all the organizers I really enjoyed it thank you for all the questions was great thank you very much you're welcome