Japan's female labour goals hit backlash
Days after Kaoru Shimada and other Japanese mothers rallied in Tokyo this year to press for more public daycare, she was shocked to read a local politician's blog blasting their "shameless" demands and asserting kids should be raised at home.
Prime Minister Shinzo Abe has vowed to take steps, including expanding daycare, to help mobilise women power as part of his "Abenomics" plan to end economic stagnation and engineer growth in a country beset by an ageing, shrinking population.
But that economic imperative is colliding with a conservative worldview, shared by many ruling party politicians as well as top business executives, that sees women's proper place as in the home, not in offices, factories or boardrooms.
"My first impression was that he was mocking us," said Shimada, a 29-year-old system engineer with a toddler son, referring to the comments by blogster Yutaro Tanaka, a local assembly member from Abe's Liberal Democratic Party (LDP).
"He has no idea of the reality," Shimada - who found a daycare spot about a week before she had to resume work in April - told Reuters at a gathering of young parents exchanging information on daycare options and related headaches.
Opposition lawmakers, experts and even some from Abe's own party say such conservative views are common inside the LDP.
"Their view of women is basically as tools to boost the birth rate, reduce social security spending and increase growth. Women have a role because they are key to solving these three problems," said Mari Miura, a political science professor at Sophia University in Tokyo.
"But they have a strong idea of the traditional family as a core ideology of conservatives. That ideology and reasonable solutions do not match, so the policy is always schizophrenic at best."
Hidden message?
Experts and working women laud Abe's goal of mobilising women power even as they note the moves are long overdue in a country where female board members account for only about 1% of the total and women's employment rate of 60% is among the lowest in developed nations.
Abe has pledged to eliminate daycare wait lists - which official data put at 25 000 nationwide and private experts much higher - in five years. The plan is to provide fiscal support for non-government facilities and ease regulations to give private operators more scope.
He has set a target of having women in 30% of leadership posts in all sectors of society by 2020 and also urged Japan Inc to put more women on corporate boards. His initial goal: one woman director per firm.
"At the end of the day, it's the first administration that I can think of that even mentioned women's participation. So that's a step forward," said Kathy Matsui, chief Japan strategist at Goldman Sachs.
She estimates that raising female labour participation rates to the same 80% seen for males could boost Japan's gross domestic product by as much as 14%.
"Obviously, this is going up against a tidal wave of potential opposition, but at the end of the day, what other choice do they have?"
Critics, however, say parts of Abe's agenda send a different message and would have the opposite effect to his stated goal.
Among the moves critics question is Abe's request for firms to increase childcare leave from a maximum of one-and -a-half years to three and an LDP proposal to make private nursery schools, which hold only morning sessions, free for pre-schoolers.
"They are saying: 'Stay home until the child is three, then put the child in nursery school and take care of him or her yourself in the afternoon,'" said opposition Democratic Party lawmaker Renho, a former TV announcer and mother of teenage twins, who goes by one name.
"The message is: 'Don't think about working full-time'."
While some women might welcome the prospect of three years' childcare leave, many say the notion is unrealistic given the need for double incomes and the likely damage to careers from a three-year gap. Currently, those taking childcare leave get a government allowance equal to half their salary.
"Practically speaking, three years would be tough," system engineer Shimada said. "I took off 18 months and there was a gap that made me feel like a rookie employee when I returned."
Silver democracy
Japanese firm Benesse Corp, where one-third of managerial staff are women, found that a three-year childcare leave programme introduced in 1990 had the opposite effect to that intended: fewer female employees returned to their jobs.
"Some did return and what they said was that it was really difficult to catch up," said a company spokesperson, Yuko Onizawa. Five years later, Benesse shortened the leave system to one year and has since found that more women return to work.
Corporate attitudes also need to change for Abe's pitch to work. Although some major firms are taking diversity policies seriously as one key to boosting profits, business lobby Keidanren is blocking a proposal to require listed firms to disclose their gender statistics.
"Keidanren is greatly opposed I think because it would be obvious how few women they have," Yuriko Koike, a former defence minister who heads the LDP's PR department and advocates bolder steps than those favoured by many in her party, told Reuters.
With public debt already twice Japan's $5trn economy, finding government funds to subsidise programmes to promote daycare and advance women in the workforce could also be tough.
The metropolis of Yokohama near Tokyo last month announced it had eliminated its daycare wait list three years ago the worst in the country through deregulation and bigger spending.
Abe has touted Yokohama as a model case others should follow, but the national government and other municipalities may be reluctant to follow through with similar spending rises.
"It's a kind of 'Silver Democracy' dilemma," said Hiroki Komazaki, founder of non-profit daycare provider Florence who sits on one of Abe's advisory panels.
"They have to cut spending on the elderly and invest in the future. But young people only vote at half the rate of the elderly."
A basic lack of understanding of the issues among many politicians remains, the LDP's Koike says, a big barrier to change.
Recalling a session of an LDP panel on policies concerning women, she said ruefully: "I explained the notion of 'diversity' and one of the men asked me 'Where is that?' He thought we were talking about a place called 'Diver City'."
Brazil backs down on transport hikes
Bowing to mass protests, authorities of Brazil's two biggest cities Sao Paulo and Rio de Janeiro on Wednesday decided to roll back transport fare hikes that had triggered widespread unrest.
Sao Paulo state governor Geraldo Alckmin told reporters that metro, train and bus fares would revert to $1.35 from $1.44 from next Monday, according to the current exchange rate, while Rio mayor Eduardo Paes said bus fares would go back to $1.24 from $1.33.
The decisions marked a major victory for the tens of thousands of citizens who have taken to the streets of both cities to vent their anger at the fare increases.
Several other Brazilian cities, including Porto Alegre and Recife, had already cancelled the fare hikes.
The current wave of unrest began nearly two weeks ago in Sao Paulo and rapidly spread to other cities just as the country on Saturday kicked off the Confederations Cup, a dry run for next year's World Cup.
The nationwide anger also focused on the $15bn the government has earmarked for the Confederations Cup and the World Cup, which many Brazilians feel would have been better spent on health and education.
The fare increases may appear modest but they were seen by many as a major burden in a country where the minimum monthly wage is currently only $306.
Bernanke: Fed likely to ease bond buying
Federal Reserve chairperson Ben Bernanke said
on Wednesday the US economy is expanding strongly enough for the central bank to begin
slowing the pace of its bond-buying stimulus later this year.
Bernanke's confirmation that the Fed is getting closer to pulling back on its $85bn in monthly asset purchases confirmed investor fears, sending stocks and bonds sharply lower and pushing benchmark Treasury yields to a 15-month high.
Moderate growth should lead to a further healing in the job market as headwinds facing the economy ease, Bernanke said. He also said policymakers expect inflation to move back up toward their long-term 2% goal.
The Fed's willingness to dial back on the amount of stimulus it is pumping into the economy reflects growing confidence in the sustainability and strength of the recovery. Since cutting interest rates to near zero in late 2008, the central bank has more than tripled its balance sheet to about $3.3trn to drive borrowing costs down and spur hiring.
"The committee currently anticipates that it will be appropriate to moderate the monthly pace of purchases later this year, and if the subsequent data remain broadly aligned with our current expectations for the economy, we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year," Bernanke said.
He added that the jobless rate should have declined to near 7% from its current rate of 7.6% by the time bond purchases are halted. If its forecasts proved too optimistic, the Fed could stop reducing its bond purchases or even raise them again, Bernanke said.
In a change of policy, Bernanke also said a majority of Fed policymakers believe the central bank should hang onto the mortgage assets it acquired through its unconventional monetary stimulus when it decides to tighten monetary policy.
He made the statements at a news conference on the Fed's decision to continue buying $40bn in mortgage-backed securities and $45bn in longer-term US government securities each month.
After a two-day meeting, the Fed's policy-setting panel offered a more upbeat assessment of the risks facing the economy than it have given after the last meeting in May. "The committee sees the downside risks to the outlook for the economy and the labour market as having diminished since the fall," it said.
A Reuters poll of 17 top Wall Street bond dealers found that 16 expect a reduction in the Fed's asset purchases by year-end, with a plurality pegging the central bank's September meeting as the starting point. These dealers saw the Fed slowing its bond purchases by $10bn to $28bn on that first pass, with a median response of $20bn.
Rate rise not seen until 2015
Bernanke stressed that a slower pace of bond buying would still be adding support to the economy, and that any decision to begin removing stimulus remained a long ways off. Any eventual increases in interest rates would also be gradual, he added.
"They do indeed plan to taper purchases later this year and hope to be done by next summer. Bernanke wants to communicate that this is not necessarily tightening, but the market may not see it that way," said Axel Merk, president and chief investment officer of Merk Investments in Palo Alto, California.
Esther George, the president of the Kansas City Fed, again dissented against the Fed's expansion of its support for the economy, expressing concern it could fuel financial imbalances and hurt the central bank's goal of keeping inflation contained. She has dissented at every policy meeting since January.
But in a surprise, the St. Louis Fed chief, James Bullard, also dissented, though in the opposite direction, arguing the Fed should have signalled more strongly its willingness to keep its stimulus in place to defend its 2% goal for inflation.
In its statement, the Fed repeated that it would not raise rates until unemployment hits 6.5% or lower, provided that the outlook for inflation stays under 2.5%.
Bernanke made clear that threshold was merely for considering a rate hike, not a trigger for necessarily making one. In fresh quarterly projections, 14 of the 19 members of the Fed's policy panel said they did not think it would be appropriate to raise rates until some time in 2015.
In a sharp downgrade, the Fed forecast the PCE price index, its preferred gauge of the price pressures facing consumers, would rise just 0.8% to 1.2% this year. However, it saw inflation heading back to 1.4% to 2.0% in 2014 and 1.6% to 2.0% in 2015.
A low inflation rate could allow the Fed to keep interest rates lower for longer and could even force additional monetary easing if low inflation persists or inflation falls further.
In a slight upgrade to their economic projections, officials forecast unemployment to average 6.5% to 6.8% in the fourth quarter of next year, and 5.8% to 6.2% in the final three months of 2015.
They forecast US economic growth of between 3.0% and 3.5% next year and 2.9% to 3.6% in 2015.
Analysts think US growth slowed a bit in the second quarter of this year in the face of fiscal drag from government spending cuts and higher taxes; recent readings from the economy have been mixed.
The labour market, a central focus of Fed efforts to boost growth, has notched steady improvement with 175 000 new jobs added in May. But US manufacturers have been hurt by softer overseas demand, and inflation has fallen even further beneath the Fed's goal.
The consumer price index was up 1.4% in May from a year ago. But the PCE price index rose just 0.7% in the 12 months through April, the most recent reading.
Bernanke's confirmation that the Fed is getting closer to pulling back on its $85bn in monthly asset purchases confirmed investor fears, sending stocks and bonds sharply lower and pushing benchmark Treasury yields to a 15-month high.
Moderate growth should lead to a further healing in the job market as headwinds facing the economy ease, Bernanke said. He also said policymakers expect inflation to move back up toward their long-term 2% goal.
The Fed's willingness to dial back on the amount of stimulus it is pumping into the economy reflects growing confidence in the sustainability and strength of the recovery. Since cutting interest rates to near zero in late 2008, the central bank has more than tripled its balance sheet to about $3.3trn to drive borrowing costs down and spur hiring.
"The committee currently anticipates that it will be appropriate to moderate the monthly pace of purchases later this year, and if the subsequent data remain broadly aligned with our current expectations for the economy, we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year," Bernanke said.
He added that the jobless rate should have declined to near 7% from its current rate of 7.6% by the time bond purchases are halted. If its forecasts proved too optimistic, the Fed could stop reducing its bond purchases or even raise them again, Bernanke said.
In a change of policy, Bernanke also said a majority of Fed policymakers believe the central bank should hang onto the mortgage assets it acquired through its unconventional monetary stimulus when it decides to tighten monetary policy.
He made the statements at a news conference on the Fed's decision to continue buying $40bn in mortgage-backed securities and $45bn in longer-term US government securities each month.
After a two-day meeting, the Fed's policy-setting panel offered a more upbeat assessment of the risks facing the economy than it have given after the last meeting in May. "The committee sees the downside risks to the outlook for the economy and the labour market as having diminished since the fall," it said.
A Reuters poll of 17 top Wall Street bond dealers found that 16 expect a reduction in the Fed's asset purchases by year-end, with a plurality pegging the central bank's September meeting as the starting point. These dealers saw the Fed slowing its bond purchases by $10bn to $28bn on that first pass, with a median response of $20bn.
Rate rise not seen until 2015
Bernanke stressed that a slower pace of bond buying would still be adding support to the economy, and that any decision to begin removing stimulus remained a long ways off. Any eventual increases in interest rates would also be gradual, he added.
"They do indeed plan to taper purchases later this year and hope to be done by next summer. Bernanke wants to communicate that this is not necessarily tightening, but the market may not see it that way," said Axel Merk, president and chief investment officer of Merk Investments in Palo Alto, California.
Esther George, the president of the Kansas City Fed, again dissented against the Fed's expansion of its support for the economy, expressing concern it could fuel financial imbalances and hurt the central bank's goal of keeping inflation contained. She has dissented at every policy meeting since January.
But in a surprise, the St. Louis Fed chief, James Bullard, also dissented, though in the opposite direction, arguing the Fed should have signalled more strongly its willingness to keep its stimulus in place to defend its 2% goal for inflation.
In its statement, the Fed repeated that it would not raise rates until unemployment hits 6.5% or lower, provided that the outlook for inflation stays under 2.5%.
Bernanke made clear that threshold was merely for considering a rate hike, not a trigger for necessarily making one. In fresh quarterly projections, 14 of the 19 members of the Fed's policy panel said they did not think it would be appropriate to raise rates until some time in 2015.
In a sharp downgrade, the Fed forecast the PCE price index, its preferred gauge of the price pressures facing consumers, would rise just 0.8% to 1.2% this year. However, it saw inflation heading back to 1.4% to 2.0% in 2014 and 1.6% to 2.0% in 2015.
A low inflation rate could allow the Fed to keep interest rates lower for longer and could even force additional monetary easing if low inflation persists or inflation falls further.
In a slight upgrade to their economic projections, officials forecast unemployment to average 6.5% to 6.8% in the fourth quarter of next year, and 5.8% to 6.2% in the final three months of 2015.
They forecast US economic growth of between 3.0% and 3.5% next year and 2.9% to 3.6% in 2015.
Analysts think US growth slowed a bit in the second quarter of this year in the face of fiscal drag from government spending cuts and higher taxes; recent readings from the economy have been mixed.
The labour market, a central focus of Fed efforts to boost growth, has notched steady improvement with 175 000 new jobs added in May. But US manufacturers have been hurt by softer overseas demand, and inflation has fallen even further beneath the Fed's goal.
The consumer price index was up 1.4% in May from a year ago. But the PCE price index rose just 0.7% in the 12 months through April, the most recent reading.
Outgoing BoE chief calls for bank reform
Britain's economic recovery is not yet secure and more needs to be done to ensure the country's banks no longer pose a threat to taxpayers, Bank of England (BoE) governor Mervyn King said in his final speech on Wednesday.
King steps down at the end of this month after more than 20 years at the bank, to be replaced by former Canadian central bank chief Mark Carney, and the 65-year-old stuck to familiar themes in an annual address to London's financial elite.
"There is a powerful case for more stimulus in the short run," said King, who has spent the last five months at the helm of the BoE's monetary policy committee as part of a dissenting minority calling for a new round of asset purchases.
"A recovery in the UK, albeit modest, is under way ... (but) growth is not yet strong enough to reduce the considerable margin of spare capacity in the economy. Nor is recovery at an adequate rate fully assured."
While Carney has been hired by Finance Minister George Osborne with a brief to find new ways for the BoE to boost Britain's economy, his appetite for asset purchases is less clear, and economists think there may be no more this year.
But King said unnecessarily high unemployment was now a bigger threat to Britons' well-being than inflation which has exceeded the BoE's 2% target for most of the past five years and that eurozone weakness and a troubled banking system remained the main obstacles to growth.
While global market interest rates had risen in recent weeks due to uncertainty about the US Federal Reserve's future bond purchases, the world economy was too unhealthy to talk of rates returning to normal pre-crisis levels anytime soon, King added.
"Bond yields have risen. But such market moves should not be confused with a return to normality," he said.
Banking on reform
King was speaking just after Osborne told the same audience at Mansion House, the Lord Mayor of London's ornate official residence, about his plans to shake up Britain's two state-controlled banks.
King said he welcomed Osborne's plans to sell the government's 39% stake in Lloyds Banking Group and consider restructuring Royal Bank of Scotland - a step he has previously said should have been taken years ago.
But more needed to be done. On Thursday the central bank's regulatory arm will publish details of how much new capital Britain's banks need to raise, with media reports suggesting that Lloyds, RBS and Barclays will bear the brunt.
"There is clearly some way to go before we can claim to have a really well-capitalised banking system," King said, rejecting some banks' view that higher capital requirements are acting as a brake on their ability to support the economy.
A longer-term problem was the size of some British banks, which are still too large and complex to be able to collapse without causing financial chaos, King said.
"We must restore trust in our banking system," he said. "It is not in our national interest to have banks that are too big to fail, too big to jail, or simply too big. Solving these problems is the work of a generation."
Earlier on Wednesday, British legislators called for laws to imprison "reckless" bankers in a report welcomed by King, who has often criticised the culture in banking.
King's speech focused on future challenges, and not the main criticism laid against him: that he paid insufficient attention to bank stability before the financial crisis.
He also wished his successor well. "The Bank of England is in safe hands, and the country will be the better for it."
