(last update: January 7, 2022)

The New Capitalism Council led by PM Kishida met on 8 November setting out priorities for the Kishida Cabinet. The Council replaces the Growth Strategy Council set up by the previous government.  The new Kishida Cabinet has made ‘re-distribution’ a major plank of its policies, away from the policies of the past decade which gave business interest prevalence under the expectation that economic growth would trickle down to the general population.

As part of a more active government policies to ensure that the broader populations profits from Japanese businesses successes, the government is also considering changes to its government procurement practices. Concretely, this would mean that suppliers who provide structural wage increases to their employees, would receive preferential treatment in the awarding of government procurement contracts by central government entities (WTO Annex 1 and Annex 3) larger than ¥15 million.

Concretely, the new rules will mean that companies can obtain additional points in case of competitive tenders where the Overall Greatest Values assessment method is used, if they can show that they are structurally increasing their employees wages. For large companies this increase has to be larger than 3% and for SMEs 1.5%. Companies wishing to make use of this preferential measure, will therefore have to submit documentation to prove this. According to Ministry of Finance data, close to 40% of all government procurement would fall under this new measure and if single tenders are taken out, it would amount to 75% of all competitive tenders. 

The new measure is scheduled to be implemented at the beginning of FY2022 in April. 

Source: Asahi Shimbun Digital, November 8, 2021, Asahi Shinbun Digital, January 7, 2022