is evidence to suggest that job security regulations in the manufacturing deter employers from hiring workers. there are clearly ways around this, but since they exist, their deterrent effect is probably being felt. second, if job security is eliminated, workers must have access to a safety net of unemployment insurance. by all accounts, the mahatma gandhi national rural employment guarantee scheme ( mgnregs ) is providing a tangible safety net for rural workers. it is time to think of cost - effective ways to extend safety net access to industrial workers as a concomitant to scaling down job security regulations. third, large numbers of workers have to be trained and equipped to work in modern industrial environments. whether this is to be done through traditional schooling or alternative methods is a matter of debate, but the primary objective should be to move from generic knowledge to work - oriented skills. the numbers involved indicate that the whole exercise is going to be a huge organizational and financial challenge, but it must be faced. iv. infrastructure the third critical area for reforms, to my mind, is infrastructure. the problems in most infrastructure sectors are well - known and can be summarized in a couple of sentences. rapid growth has raised demand for infrastructure services far in excess of available capacity. meanwhile, a combination of policy, regulatory and financial factors has slowed the pace of investment in infrastructure, leading to a persistence of the gap. we can look at this basic condition of shortage from a variety of perspectives. charts 9 and chart 10 provide some indications of the gaps that currently exist. chart 9 reinforces the general perception of severe power shortages across the country. the northern and western regions are relatively dynamic in terms of their growth momentum and the magnitude of shortage that is estimated for them may prove to be significant drag on growth. of course, since the deficit has persisted for some time, most establishments look for alternatives in the form of captive power. however, this is relatively costly, not to mention more dependent on diesel, which then contributes to an increase in petroleum demand, which has both fiscal and balance of payments consequences. the chart also provides an indication of how much distance there is to cover in providing the country a comprehensive four - lane highway system, the absence of which is leading to huge inefficiencies in the national transportation system. the impact of inadequate supply of power and transport infrastructure on manufacturing activity is quite significant. this sector, in general, is infrastructure - intensive and any increase in costs due to unreliable or privately provided infrastructure services tends

economy is faced with an imminent challenge of becoming serious about strengthening medium - to long - term growth potential while promoting fiscal structural reform. strengthen growth potential by a two - pronged strategy of external and domestic demand strengthening medium - to long - term growth potential is not an easy task. nevertheless, it should be achieved by all means while keeping in mind the following four. first, incorporate global demand as much as possible. to that end, it is vital for firms to, through exports, and further more through aggressive overseas expansion, accurately gauge local needs and tap the market. as for firms ’ overseas expansion, unless the pace of expansion is too fast, it would not necessarily be a factor in causing the hollowing out of domestic employment. if a cycle will be established that firms increase profits overseas, pass them on domestically, and invest in research and development of new products and services, more high value - added jobs will be generated in japan, thereby could contribute to strengthening foundations for economic growth. efforts to increase foreigners who stay in japan for the purpose of tourism and business and prepare an environment that attracts investment from overseas will also be an effective strategy in incorporating global demand and increasing domestic employment together. second, tap potential domestic demand. an aging society will have its own new potential needs, and there will be plenty of room for coping thoroughly with the diversified concept of values and life styles. there is much potential in the domestic market, let alone healthcare, including services for firms and households based on information technology. while i have earlier referred to concern over electric supply and demand, on the other hand, efforts to overcome such challenge, including saving energy and developing new alternative energies, could lead to a generation of new added - value. third, enhance the flexibility of the labor market. to lessen the likelihood of a labor shortage associated with aging being a binding factor for economic growth, it is necessary to promote employment of the elderly and women. preparing an environment that facilitates job transfers and the start of new businesses will lead to the effective use of human resources or the activation of metabolism in the entire economy. fostering global human resources will also be imperative. fourth, strengthen the function of financial and capital markets. for the development of new markets, it is critical to take risks. to support that, accepting risks by investors and financial institutions, namely, a provision of risk money is necessary. japan ’ s households have almost bis central bankers ’ speeches 1, 500 trillion yen of financial assets, and there are ample deposits