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The number of executives and employees at 95 government-affiliated corporations should be cut by 10 percent, and another 10 percent cut should be applied to expenditures on public works projects under their umbrella, according to a proposal made August 26 by a panel of the ruling Liberal Democratic Party.

The LDP panel on administrative reform compiled a set of proposals to downsize governmental corporations in an effort to reduce public spending on such bodies at a time when the nation is seeking ways to recover fiscal health.

By the end of next March, combined long-term debts of the central and local governments are expected to hit 476 trillion yen.

The panel, headed by Koso Sato, an LDP House of Representatives member and former chairman of the party’s General Affairs Council, also suggested that steps should be taken to discourage public corporations from offering lucrative posts to retired bureaucrats.

Sato handed the proposals to Prime Minister Ryutaro Hashimoto on August 26. Sato’s panel has so far compiled three sets of proposals, including the latest one, to reform governmental corporations, which are often referred to as symbols of nontransparency and inefficiency in regards to state expenditures.

Governmental corporations, also known as special corporations, were set up by law to pursue specific objectives, such as highway building and low-interest loan brokering to small firms.

Under the new set of proposals, the panel is targeting cuts of about 50 relevant executive posts in two years and about 11,000 employees in 10 years. However, Sato said it would be difficult for the panel to estimate how much the proposed measures could reduce government expenditures on public corporations.

Concerning the highly controversial practice of “amakudari,” in which retired bureaucrats land lucrative posts at private companies and governmental corporations, the panel said that former bureaucrats should be allowed to take less than half of the executive posts at governmental corporations.

Although no official statistics exist on former bureaucrats who take posts at governmental corporations, it is generally believed that the great majority of executive posts at such corporations are currently held by former high-ranking civil servants.

Currently, there are no rules under the National Personnel Agency regulating the practice of amakudari. The panel also said that the former bureaucrats should be banned from “watari,” or migrating to a new high-salary post at a public corporation after retiring and collecting a huge retirement payment from another.

One of the proposals said that the bureaucrats-turned-executives of such corporations should not obtain larger salaries than those for the prime minister and other ministers who appoint them. The current salary of the president of the Bank of Japan is about 51 million yen a year, although the prime minister, who appoints the BOJ president, gets only a yearly salary of 45 million yen, according to Takamori Makino, a panel member.

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