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Published: Monday January 20, 2014 MYT 12:20:02 PM
Updated: Monday January 20, 2014 MYT 12:20:54 PM

Japan to open door further to foreign workers for economic growth

TOKYO (Reuters) - Japan's government agreed on Monday to make it easier for firms to hire foreign workers for highly-skilled positions and as trainees to offset a declining workforce and accelerate economic growth.

The government will also take steps to increase female workers in management positions and strengthen the child care system to increase the number of working women, a top advisory panel said on Monday.

Japan has the most rapidly aging society in the world, with a quarter of the population already over 65 years of age. The workforce is also shrinking, which could become a considerable drag on growth.

Policies that increase foreign workers and female employees are important steps needed to stop the decline in the workforce, ease labour shortages, increase tax revenue and raise the potential growth rate.

The government will flesh out the policies, which are part of a second instalment of its economic growth strategy, by mid-year, the Industrial Competitiveness Council said.

Prime Minister Shinzo Abe has made ending 15 years of deflation and economic malaise one of his top priorities since taking office more than a year ago.

Abe won initial success with stimulus spending and expanded quantitative easing from the Bank of Japan, but many economists warn that the government needs to rely more on deregulation and structural reforms to increase growth in the long term.

Some industries, such as construction, child care and nursing have faced labour shortages, so policies allowing firms to retain more foreign workers could give these industries a boost.

The government will also consider lowering the effective corporate tax rate and expanding the tax base to make Japanese firms more competitive, the panel said on Monday.

Japan's corporate tax rate, which is set at 38 percent for a large Tokyo-based firm, is among the highest in the world and companies often lobby to lower the tax burden.

(Reporting by Stanley White; Editing by Kim Coghill)

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