october 21, 2016 bank of japan new challenges for japan's labor market speech at the japan summit 2016 in tokyo haruhiko kuroda governor of the bank of japan introduction it is my great pleasure to have the opportunity today to speak at this japan summit 2016. today's summit brings to the fore the new challenges for japan's labor market in responding to advances in technological innovation, globalization, and demographic change. whether japan's economy will grow in the long - run depends on whether the country's labor market can successfully adapt to this changing environment. indeed, labor market reform is a vital part of the current government's policy agenda. as for the long - term economic outlook, given japan's aging population and low birth rate, an increase in labor force participation and a further rise in labor productivity are both essential if japan is to lift sustainable long - run growth, in other words, to raise its growth potential. today, i offer my own vision of the future for japan's labor market, and look at how it will strengthen the growth potential of our economy. feature of japan's labor market it - related developments and globalization have affected japan's labor market. the manufacturing industry, in particular, has seen existing jobs being replaced with machines and outsourcing to other countries, resulting in downward pressure on wages and lost job opportunities. however, there is a view that japan's labor market as a whole has not undergone drastic changes. our well - known system of life - time employment and seniority - based wages virtually continues to this day. this practice prevailed among japanese firms especially throughout the period of high economic growth. legal norms developed to support this system provided the firm foundations for the job security enjoyed in japan's labor market. with the japanese economy entering a period of stagnant growth in the second half of the 1990s, the economic situation underwent dramatic changes. nevertheless, despite shifts to the use of non - regular workers, the employment and wage system for regular workers remained virtually the same. indeed, the average number of working years at a specific firm is about 14 years for japanese male workers, the highest among advanced economies ; this compares, for example, with five years for those in the united states and nine years in the united kingdom. when looking at the evolution of wages over male workers'lifetimes, wages are seen to approximately double after 30 working years compared to when they first started working - - once again the highest such figure among advanced

to financing investments in the region. in particular, the presence of larger and increasingly more viable financial institutions in the region along with more developed financial markets have generated greater cross - border funding possibilities in the region and has allowed for more funding options for businesses. further work in this direction is underway and significant progress on this front is expected to occur in this next decade. key distinguishing features of asean ’ s model of integration while asean may draw on the experience from the european model of monetary and financial integration, the region has charted its own path towards greater financial integration. in the european union, the formation of a monetary union has represented a major element in realising their economic integration. the adoption of a single currency was a critical step in fostering the regional european integration. in contrast, a monetary union with a single currency is not the step forward for the asean region. a study by the asean central banks in the early 2000s concluded that a common currency should not be the direction to be pursued by the region, given that, the asean economies did not have the preconditions to achieve such a union. indeed, such preconditions would require significant and high costs to the region. this would make it a non - viable proposition. the asean region represents one of the most diverse regions in the world in terms of size, economic systems and structures, stages of development, financial systems and prevailing economic and financial conditions. it was therefore concluded that rather than pursuing a strategy towards achieving a single currency and a monetary union, the region would instead be better served by greater regional financial integration to achieve the very same objectives of a greater shared economic prosperity for the region. another key difference between the european and asean model of integration lies in the governance structure. in europe, the monetary union is governed by a centralised institution, while the approach in asean is to build on institutional arrangements and mechanisms that would facilitate financial integration while leveraging on a network of committees for the governance process. this is supported by agreements that have been and are being entered into based on commitments made by the respective members of asean. financial integration in asean has also adopted a more flexible approach that accords the member countries to participate in the process based on their state of readiness. this is to ensure that no countries will be adversely affected by the process. additionally, significant efforts have focused on capacity building in a range of areas of banking and finance to promote an bis central bankers ’ speeches inclusive advancement of the integration process in the region. regional cooperation among