Shinzo Abe's quiet social revolution

TOKYO -- If Shinzo Abe wins the Sept. 20 leadership race for Japan's ruling Liberal Democratic Party, he will gain three more years as prime minister. In the process, he will be poised to enter the history books -- if only for the length of his tenure.

If he stays in office until the summer of 2020, he will surpass Eisaku Sato for the longest contiguous run as prime minister. By the end of 2019, he will pass Taro Katsura's total of 2,886 days in office as the country's longest-serving prime minister (Abe also held the position for a year starting September 2006). To find a leader who has reigned longer, one would have to go back to the 19th century, when samurai ruled the land.

Yet it is harder to calculate what Abe's legacy would be after more than a decade in power. Most likely it will not be his Abenomics economic policy. Nor his desire to reform Japan's constitution, which he has identified as his life's work.

Instead, the hawkish conservative may be remembered for a quiet social revolution that shifted the fabric of the country. Abe's administration has opened up one of the world's most closed-off nations to foreign talent, while also changing employment rules -- including those that will allow Japanese people to retire older than anywhere else in the world.

Japan's rapidly aging population and severe labor shortage are among the most pressing issues facing Abe. (Photo by Masayuki Terazawa)

"You know, I did serve as the head of the LDP social affairs committee," Abe noted with a mischievous smile in a September interview with Nikkei as he explained his goals for social security policy and work reform. That committee, a powerful division of the LDP's Policy Research Council, covers fields like medicine, pensions, nursing care and employment policy. Abe held that post early in his parliamentary career, a little-known period that provides insight into his less hawkish side.

Abe, the grandson of former Prime Minister Nobusuke Kishi, began his first stint as prime minister in 2006 vowing to fulfill his grandfather's ambition of amending the pacifist constitution, including the clause renouncing Japan's right to maintain a military. At 52, he was the youngest postwar prime minister.

His star power helped propel him to the top job despite his age, as did his confrontational approach to Japan's problematic neighbor, North Korea. He brought the issue of the North's kidnappings of Japanese nationals in the 1970s and '80s -- a matter until then usually discussed in hushed tones -- into the spotlight. Around that time he published "Towards a Beautiful Country," a book describing his vision for Japan.

But illness and a crushing defeat in an upper house election forced him to step down just 366 days later. "It was hell. I lost all my honor and my pride," he says of that period.

The LDP was left reeling. In 2009, the party lost its grip on the power it had held almost continuously since World War II. Meanwhile, Abe focused on winning back voters in his home district in Yamaguchi Prefecture.

His second chance came sooner than expected. In 2012, he once again became leader of the LDP by championing Abenomics -- his signature economic policy designed to boost Japan's economy through aggressive monetary easing and public spending.

Abe has been virtually invincible since, with the LDP winning five national elections in a row -- an achievement that looks even more impressive considering that Japan churned through five prime ministers in the years between his administrations.

He had learned from past mistakes, setting aside his push for a "beautiful country" and instead focusing on lifting the economy. Historically, public support for the LDP has risen when the economy has been strong.

Former Defense Minister Shigeru Ishiba is running against Abe in the LDP presidential election scheduled for Sept. 20. (Photo by Uichiro Kasai)

Fellow LDP member Shigeru Ishiba, who almost beat Abe back in 2012 and is challenging him once again for the party's reins, remains critical of Abenomics. "He was lucky thanks to a strong economy overseas, easy monetary policy, a weak yen and strong stocks," he said of Abe in a recent interview with Nikkei.

Whether lucky or smart, Abe has overseen a strong period for the benchmark Nikkei Stock Average, which has more than doubled since he came into office in 2012. A weaker yen accompanied the Bank of Japan's bold monetary easing, boosting Japanese exports and sparking a boom in inbound tourism.

And despite a decrease in the working-age population by 4.5 million, the number of workers has increased by 2.5 million. As a result, the unemployment rate now stands at 2.5%, near a 25-year low, compared to a 2012 average of 4.3%. With corporate earnings at record levels, government tax receipts are also nearing an all-time high.

A better economic environment gave Abe more space to push ahead with his social agenda, said Tobias Harris, Japan analyst at Teneo Intelligence, a New York-based political risk consultancy. "He's been helped by a relatively benign global growth environment, at least until recently, ensuring that Japan had the space to pursue its policy experiments."

But wage growth remains subdued and has often failed to keep pace with inflation. With household consumption remaining fragile, economic growth averaged a modest 1.3% between 2012 and 2017.

Abe has also taken more unorthodox measures to boost the economy. "Please raise wages by more than 3%," Abe pleaded in a meeting with Japan's top business leaders in January. This was the fourth consecutive year that Abe had made the request. His campaign for higher wages looks even stronger than the Japanese Trade Union Confederation, the country's largest labor organization.

Abe also sent aides across the country to advance his agenda. Akira Amari, a former minister in charge of Abenomics, visited Aichi Prefecture -- home to Toyota Motor's headquarters and the heart of Japan's automotive industry. There, he argued that the auto sector was enjoying unprecedented profits because of a weak yen, and by extension Abenomics, and that companies had an obligation to raise wages as asked. They had no choice but to agree.

Problems in the pickle business

Such moves may seem out of sync with the LDP's conservative ideology, but the party has often championed socialist causes to win over more liberal-minded voters. For example, the party began planning a universal health insurance system in the 1950s and later made it a reality.

"The LDP has forged a stable government by incorporating socialist policies," the late Koichi Kato, a former secretary-general who was dubbed the "prince" of the party, once said. "We are the most successful and pragmatic 'socialist' party in the world."

In his second stint as prime minister, Abe seems to have finally understood the secret to the LDP's longevity: an all-engulfing pragmatism. Reality over ideals. This has been clearest in Abe's decision to expand acceptance of foreign workers. Under Abe's administration, the number of foreign workers has almost doubled to 1.3 million. Laborers from China, Vietnam and the Philippines have poured into Japan to fill gaps in the health care, construction and retail sectors.

These Vietnamese construction workers are among the millions of foreign workers to enter Japan over the past five years. (Photo by Ken Kobayashi)

"With the economy performing so well, it is becoming apparent that hiring is tight," Abe told Nikkei. "Worker shortages are starting to hamper a variety of fields."

The ills of a shrinking population were hardly noticeable during the country's long deflationary spiral. But after growth returned in 2013, businesses began to shout their concerns about a smaller workforce.

"Nursing facilities, for instance, have a severe lack of hands," said Abe, whose recognition of the issue has been heavily shaped by Yoshihide Suga, his chief cabinet secretary since 2012.

Suga realized the need for more workers in nursing facilities last fall, when local caregivers raised the issue with him and requested foreign staffers. He gathered officials to look into the problem and was told that there was adequate manpower.

Doubting their claims, Suga and his team continued research for another half a year. They decided to expand acceptance of foreign workers in five fields facing substantial labor shortages. When Suga explained his plan to Abe, the prime minister said yes, only asking for assurance that this would not be interpreted as an immigration policy.

Suga and Abe's decision risked blowback from the LDP's largely conservative base. But instead other industries have beaten a path to Abe's door asking for similar programs.

In May, the LDP hosted a meeting of an all-parliamentary group to revitalize Japan's traditional pickle business. The pickle industry wanted just one thing: greater acceptance of foreign workers, since facilities making the traditional Japanese food product are chronically understaffed, and Suga has been hard-pressed to answer the industry's request under current rules.

Along with opening doors to foreign workers, the move to keep people working until 70 is driven by the same issue: the debilitating labor shortage.

Abe's policies of pragmatism contain qualities that break with what is commonly thought of as the conservative agenda. They do not paint the traditional image of Japan as an ethnically homogeneous society where women are housewives, three generations live in the same household, and the elderly spend their golden years at home being looked after by their children.

Abe, whose Womenomics forms a major plank of his labor reforms, seeks to maintain a strong economy by bringing in more female, elderly and immigrant workers. The labor participation rate among working-age women rose to 67.4% in 2017 from 60.7% in 2012. But labor is still tight -- a condition that is expected to continue in the run-up to the 2020 Olympics.

"Conservative through and through"

In his 1992 book "Seize the Moment," former U.S. President Richard Nixon identified Japan's aging and shrinking population as an economic weakness. Abe is attempting to counterbalance these challenges not through fanfare, but through stealth policy shifts.

Even so, conservatives continue to support him.

Abe remains steadfast in his quest to amend Japan's pacifist constitution, despite the challenge from Ishiba for the LDP leadership. "I will accelerate the unification of the party so that we can submit the constitutional amendment proposal during the next legislative session," Abe told Nikkei.

Shusei Tanaka, a retired politician who forged strong ties with such liberal prime ministers as Morihiro Hosokawa and Kiichi Miyazawa, certifies Abe's conservative street cred. "In 1995, during the 50th anniversary of the end of World War II, he opposed until the very end a resolution apologizing for Japan's conduct during the war, put forward by Prime Minister Tomiichi Murayama," Tanaka said.

"He's a conservative through and through," Tanaka said.

Abe started his administration with an approval rating above 60%, then saw it slip as he pushed through unpopular legislative agenda, such as bills to enable Japan to fight overseas alongside the U.S. or legalize casinos. The approval fell below 40% last year after allegations surfaced that Abe and his associates have given favors to ideological bedfellows in their college license application or government property acquisition.

People gather in front of parliamentary buildings in Tokyo on March 13 calling for Abe's resignation over an alleged cronyism cover-up.   © Kyodo

"I think Abe has been particularly lucky -- the opposition imploded and has been unable to put itself together, the LDP has a curious lack of strong politicians in the prime of their careers who could rival Abe, and memories of the revolving door premiership have given him high but soft approval ratings that have kept him afloat," Harris said.

Fellow conservatives have yet to find an ideological leader capable of filling Abe's shoes. This is especially true now that the LDP is heading toward next summer's upper house elections. If the LDP seals a convincing victory, it opens the door to the party finally tackling the task of amending the constitution.

But two events -- the imperial succession in 2019 and the Olympics in 2020 -- will likely result in pressure to preserve national unity. "I think there would be discomfort from within the LDP over launching a new imperial reign in the midst of a fierce national debate over the constitution," Harris said.

And with few political observers predicting a huge LDP victory next summer, Abe's dream of changing the charter stands a good chance of remaining unfulfilled. But even absent that accomplishment, Abe will likely be remembered as a leader who ushered in a revolution of sorts in Japanese society.

Additional reporting by Nikkei staff writer Mitsuru Obe