labor's share are likely to have been influenced by changes in firms'attitudes to corporate management, as they take effective advantage of deregulation of the labor market to review the distribution of their income between capital and labor. i often hear the claim that japan's economic recovery has not made itself properly felt. the delayed recovery of household income which we have been discussing may well be one reason for this. from the standpoint of the individual, if his or her wages do not increase, then it is perfectly natural that he or she has no genuine sense of a recovery. however, when we consider the extremely high level of corporate profits, it seems reasonable to expect that the beneficial effects of this will gradually feed through from the corporate to the household sector and at some point household income will start to increase. some firms have commented that there may be a limit to the increase in the number of non - regular employees because job - specific skills and expertise cannot be fully shared and passed on among such employees. in fact, there are signs that the increase in the proportion of part - time workers in the work force has recently been slowing slightly. in this context, we will continue to carefully monitor these and other developments in household income. b. firmness in household consumption the second feature of the current recovery phase is that, despite the fact that the improvement in the household income situation has remained moderate, household consumption has continued to show some positive movements. although household consumption recovering ahead of household income is a phenomenon often seen in the united states, it is almost unprecedented in japan, where households are usually unwilling to borrow to spend. the recovery in household consumption in the absence of a significant improvement in household income has occurred not only as a result of structural factors such as japan's changing demographics, meaning that there is a larger proportion of elderly people who have a higher propensity to consume, but also because the propensity to consume among elderly people has itself been rising recently. a number of reasons may be put forward for this rise. for example, there are those who point to the influence of the nursing insurance scheme introduced in 2000. our view at the bank is that a significant contribution has been made also by firms'efforts to gain a better grasp of the needs of customers and to provide them with new and attractive products and services that meet their requirements. firms that have tailored their marketing strategies to specifically target the elderly have induced the latter to part with some of their liberal endowment of disposable

is, and granted independence to their central banks. there is a vast amount of research showing that an economy performs better when the central bank is independent. central bank independence is thus important for the achievement of sustainable growth, price stability, and financial stability. hence, central bank independence is one of the considerations of domestic and foreign investors in deciding where to invest. this consideration is expressed, among other things, in the country's rating and in the costs incurred by the government and the private sector in raising capital. it is also important that the independence of the central bank be accompanied by fruitful cooperation between it and the government, including the ministry of finance. on this point i would like to mention the excellent cooperation between the minister of finance and me, and between the senior personnel in the ministry of finance and the bank. the modern approach to central bank independence is expressed in the laws relating to modern central banks in advanced countries worldwide. this is also the approach underlying the new bank of israel bill which we are drafting in conjunction with the ministry of finance and with the support of the prime minister. this law will comply with the accepted standards of central banks in advanced countries, and will also, and mainly, serve the economy, the state and its citizens in the best possible way. i hope that the government will present the new bill to the knesset in the very near future. this will be a further milestone in building the foundations of an advanced and modern economy in israel. that will be an achievement the state of israel and its citizens can be proud of as the country celebrates its 60th anniversary.