GREAT expectations at home and abroad surrounded the announcement on June 5th of the “third arrow” of Abenomics, the plan of Shinzo Abe, Japan’s prime minister, to pull the country out of its long slump. The first arrow had come in the form of a monetary revolution at the Bank of Japan on April 4th, when the bank’s new governor, Haruhiko Kuroda, pledged to end deflation by pumping vast quantities of money into the economy. The second arrow was a similarly dramatic fiscal stimulus package worth {Yen}10.3 trillion ($116 billion). But the keenly awaited growth strategy is the most important of the three arrows, since it seeks to boost Japan’s long-term economic performance. When it came, however, the announcement left many disappointed by its timidity. Coming after a series of stockmarket falls, it suggested that Abenomics was already fizzling out.

To help design the strategy, Mr Abe had convened a series of reform committees, most notably the Headquarters for Japan’s Economic Revitalisation inside his own Liberal Democratic Party (LDP), and the Industrial Competitiveness Council (ICC). He invited onto them private-sector businesspeople, economists and proponents of reform, including Heizo Takenaka, the former right-hand man of Junichiro Koizumi, who as prime minister between 2001 and 2006 fought against fierce opposition to privatise the postal system.

One area that reformers hoped the committees would tackle is Japan’s labour market. Unless they are going out of business, firms are barred from firing staff employees. That produces perverse results; in January the labour ministry investigated the sad phenomenon of oidashi-beya, or “banishment rooms”. Some well-known firms, it was reported, were sending hundreds of employees into special rooms and leaving them with little or nothing to do all day. Officially, the rooms are to retrain people for new assignments, but the true purpose, many say, is to push workers into leaving. Most companies hang on to their excess workers, so their costs are inflated, leaving them unwilling to take on young employees or to raise salaries. This in turn has contributed to stagnant wages and continued deflation.

The reformists made bold suggestions for the labour market and for other parts of the economy. Firms should be able to fire employees with severance pay, some argued. Agriculture is in urgent need of reform as Japan enters negotiations for the Trans Pacific Partnership, a free-trade agreement, in July. Most farmers, tending tiny plots on a part-time basis, are uncompetitive. Companies should be allowed to buy farmland, said private-sector members of the ICC; at present they may only rent, and are bound by tight regulations. To help eliminate loss-making firms and encourage the birth of profitable new ones, the LDP panel urged an overhaul of Japan’s famously poor corporate governance. The law, it said, should oblige firms to enlist independent board directors.

But the government’s announcement did not go so far. Indeed, most of the more radical ideas put forward by Mr Abe’s committees failed to make it into the strategy announced on June 5th, which instead evoked the long tradition of multi-year economic plans. It contained plenty of ambitious targets, such as a promise to lift income per person by 40% over ten years. And it has some helpful measures, such as lifting a ban on the sale of drugs online. Its centrepiece is a series of deregulated and lightly taxed zones around the country, to be overseen by a new minister. These will become the engine to pull the economy forward, says Akira Amari, the economy minister. Several past governments have created such zones, with some success; the robotics industry, for instance, benefited from being able to test new robots in special areas. But under the Democratic Party of Japan in 2009-12, a series of international zones failed to achieve much.

Little has been included on the key issues of the labour market, health care, agriculture and broader business deregulation, says a member of the ICC. Instead of tackling dismissal rules, the government’s strategy creates a third category of contract worker. This is very disappointing, says Yoshihiko Miyauchi, chairman of Orix Corp, a conglomerate. Except for a new public body which will collect farmland and lease it to firms, policy on agriculture will remain largely unchanged. Nor will outside directors be compulsory on corporate boards, as the LDP panel recommended. Keidanren, a powerful lobby group for big firms which is a strong backer of the LDP, is only half a reformer; it throws its weight behind labour-market liberalisation, but also opposes more outside oversight of its own members.

On several parts of the growth strategy, the government had to fight, but prevailed, says Mr Amari. The chief of Japan’s medical association visited him to oppose the sale of drugs online, he says, but the measure still went through. The growth strategy also takes steps to allow patients to pay privately for advanced drugs without forfeiting public coverage of the rest of their treatment, as happens now; doctors fiercely oppose this, he says.

Insiders say that LDP members pressed forcefully to make sure Mr Abe did not announce anything too radical ahead of July’s crucial election for the upper house of parliament. The party has long relied on special-interest groups, notably farmers, doctors and businesses. Since its political opponents are weak, says Kotaro Tamura, who worked for Mr Abe during his disastrous first term as prime minister, the party could have announced a sharper third arrow. But in the end it decided not to risk it before the election, not wanting to rely on a potentially fickle general public.

By mid-May the stockmarket had nearly doubled within six months on exuberance about Abenomics, especially on expectations of structural reform. That it has fallen by 20% since then, and fell again during Mr Abe’s speech last week, alarmed his advisers. They quickly promised movement on tax cuts for business.

People who helped to formulate the growth strategy say that Mr Abe and his cabinet will go much further once the party wins control of the upper house next month, as it is expected to do. More radical steps will be taken on agriculture, for instance, promises one of the ICC’s members. One important stage will be a cabinet reshuffle, which is expected in September. Mr Abe’s current cabinet contains some ministers who were picked chiefly as a reward for supporting his unexpectedly successful bid for the party’s leadership last year; a new cabinet may well contain keener reformers. Pro-reformists also take heart from the fact that Yoshihide Suga, the powerful chief cabinet secretary, strongly backs reform. He is close to Mr Takenaka, the most ardent advocate of change.

But Mr Tamura is worried. Several of the LDP’s candidates for the upper house election represent vested interests. Mr Abe, he says, could have unleashed a more penetrating third arrow as a test to approve new candidates, as Mr Koizumi did with postal reform. Meanwhile, Mr Abe has another project, changing Japan’s post-war constitution, which could distract attention from pushing through structural reform. The third arrow is still a long way short of its target.