Japan's Quest to Pilot Social and Economic Reforms through Special Economic Zones


As reported by the Economist, Japanese Prime Minister Shinzo Abe has proposed an interesting new use for special economic zones.  Special Economic Zones ("SEZs") have been famously used as pilots for testing proposed economic reforms before they are enacted throughout an entire country.  Under to Prime Minister Abe's plan, however, SEZs would be used to test out a broad range of social reforms in addition to economic ones.  Particularly, the zones would be used to promote greater female participation in the workforce, inclusion of foreign workers, and more flexibility over firing employees. 

Pasted below are the most relevant sections concerning the use of SEZs.  View the full article here.  What are your thoughts?

"Despite his past image as a social conservative intent on maintaining Japan’s traditional gender roles, Mr Abe’s government is to allow foreign workers to care for children and the elderly in a series of “special economic zones”, and so help women climb the career ladder. This has elicited the usual xenophobia, including from the labour minister. Mr Tamura suggested that foreign influences might damage the development of Japanese youngsters. The LDP may also change the tax system to stop penalising working wives. Millions of couples who benefit from the current system will be up in arms.

Mr Abe also seems willing to take on powerful vested interests in farming and in health care. Supporters see as among his boldest moves an attempt to overhaul Japan Agriculture (JA), a network of agricultural co-operatives that is one of the LDP’s most powerful political supporters. In health care, the government will allow patients to combine private medical care with publicly covered medicine in many more cases, rather than forcing them to forfeit their public coverage when opting for advanced treatments. That should boost advanced health care and lay the ground for increased medical tourism.

Mr Abe has also identified a number of special economic zones to experiment with the most ambitious reforms. When ministers and their bureaucrats resist making changes nationwide, Mr Abe threatens to enact them still more radically in the zones, which include Tokyo and Osaka....

For Soichiro Takashima, the young mayor of Fukuoka, a city on the southern island of Kyushu, it is the poor prospects of Japan’s youth that Mr Abe’s reforms must improve. His generation has never seen an increase in salary, he says. And yet, he explains, it “wants to dream and succeed like our counterparts elsewhere in Asia”.

Mr Takashima’s plan for Fukuoka, another of the new special economic zones, was to allow firms to fire employees with ease in their first five years in business. He backed down after strong opposition from locals and from the labour ministry in Tokyo. For now Fukuoka will open centres to advise firms about their rights to make lay-offs. Yet Mr Abe is intent on backing reforming mayors such as Mr Hirose and Mr Takashima. He has pledged to extend reforms in the zones within two years."

Source: The Battle for Japan: Shinzo Abe’s fight to reshape Japan’s economy and society is entering a new phase, The Economist (June 28, 2014)