Published in EIC Outlook Q2/2017 Click here for more detail
Household consumption in Japan remains stagnant, inching up just 0.4%YOY in 2016 following a contraction of 0.4%YOY in 2015. To stimulate spending, the Japanese government keeps launching new measures. Its latest effort is a “Premium Friday” campaign, part of a public-private partnership scheme under the Japan Revitalization Strategy 2016 policy. The campaign encourages companies to allow employees to leave work early, at 3 p.m., on the last Friday of each month, in the hope that workers would then spend more on shopping, dining and leisure. The campaign was launched on February 24, 2017.
EIC believes that Premium Friday will have only a limited impact on spending. The measure is not mandatory, and so not all companies will participate. Allowing employees to leave work early does not automatically translate into more spending, since they might simply go home and rest instead. Japanese consumers are still wary of spending and prefer to maintain high savings. A poll reported by the Nikkei Asian Review found that only 5.8% of large corporations and 2.4% of small companies surveyed have followed through on the measure. Of the 2,200 workers surveyed, only 3.7% actually left work early. Research on Japanese consumers’ spending plans compiled by the Mizuho Research Institute reveals that the majority plan to rest at home or spend time with family, rather than go out. The second-most popular choice is to spend on services rather than goods, such as tourism, eating out, sports and entertainment.
Tourism is the best bet for stimulating consumption, but corporate culture may prove to be a major obstacle. Tourism spending is higher on average than spending on other services. A survey by DeNA Travel showed that more people are planning overnight trips, both domestic and abroad (for example, to South Korea and Taiwan), thanks to the Premium Friday campaign. Such trips might increase spending by 0.2 - 0.3 trillion yen, or around 0.2% of total household consumption. Although the figure might not be high, the measure could nevertheless help boost consumer confidence overall. Still, Japanese work culture could prove to be a major obstacle. Most company employees are reluctant to leave the office before their supervisors do, for example. As a result, the actual implementation rate of the measure is likely to be low, and it remains to be seen whether Premium Friday will lead to more spending in the coming months.