Japan, land of rising
inequities By Bennett Richardson
TOKYO - The country that once called itself a
place where everyone was middle-class is splitting into
a nation of haves and have-nots. A survey by the
national daily Yomiuri Shimbun this week shows that more
than half of those polled felt that the gap between rich
and poor in Japan was widening. The poll also showed
that those who consider themselves to be
lower-middle-class or poor had increased by 11
percentage points from a similar study 10 years ago, to
34%.
The results underscore that the changes in
the economy since the bursting of the asset price bubble
in the early 1990s have taken their toll on the
traditional Japanese ideal of economic egalitarianism.
The common perception is that most Japanese share evenly
the rewards of the miraculous postwar growth that
spawned Tokyo's never-ending skyline.
The
shortage of labor while the nation raced after World War
II to build world-class factories, mass transit systems
and cities initially ensured little wage differential
between blue- and white-collar workers. But the gap
between rich and poor first began to appear during the
1980s go-go years and accelerated with the rising value
of land, shares and other assets.
Wage
differentials accelerated in particular between 1984 and
1989 - times when Japanese corporations famously bought
Vincent van Gogh's sunflower paintings and other
masterpieces to adorn smoky company boardrooms, and golf
was the sport of choice to discuss divvying up trophy
pieces of downtown Manhattan real estate.
While
it is true that the paychecks of workers and their
bosses started heading in opposite directions in Japan
some 20 years ago, the split has grown under the
influence of deflation. The middle class is shrinking in
Japan, to be replaced by a small group of very rich and
a growing sub-class of what can only be described as
"Japanese trash".
One Bank of Japan survey shows
that the wage gap grew consistently over the late 1990s
to hit record highs in the past couple of years.
Inevitably, this has created winners and losers in a
society that used to pride itself on economic
homogeneity. "Corporate restructuring measures have
brought about a sharp rise in the number of retrenched
middle-age workers and the number of young men and women
who find themselves unable to secure a job," says Seiji
Adachi, an economist at Credit Suisse First Boston in
Tokyo. At the same time, brand-name boutiques in
high-class shopping areas "continue to do a roaring
trade and luxury condominiums continue to sell like
hotcakes", he says.
In the early 1990s, the
income gap remained small by US standards - government
statistics show that company presidents earned only 5.5
times as much as the average Japanese worker in 1991.
Still riding high on the excesses of the 1980s and
blissfully unaware of the long, dark tunnel the economy
had just entered, politicians and business bigwigs
crowed over employees trained to consider the "company
as family" as a unique Japanese management trait. Salty
corporate presidents and regular employees ate in the
same company cafeteria and discussed baseball, or shared
personal problems much the same as best friends might do
in the less equitable West.
No longer. Japanese
firms are increasingly being forced to pay top
management higher salaries to keep executives from being
nabbed by other corporations. A few years ago, the
lifetime-employment system meant that top management was
composed of workers who had spent 30 years rising
through the ranks of the same firm - workers who jumped
ship were considered tainted.
Companies across
the nation, including conservative giants such as
Hitachi and Matsushita Electric Industrial, have
scrapped seniority-based wage systems in an effort to
create competition between workers for pay packets.
Firms such as Nissan Motor have gone one step further by
tapping a small group of younger workers as people with
the potential to become chief executives, and now pay
them a higher salary than the average worker to
encourage their ambitions. Same-level employees in the
same firm are now likely to be receiving different wages
as more firms introduce merit-based pay.
As the
old hierarchies crumble, Japanese working for the
private sector are finding themselves falling into two
groups - highly valued workers who can leapfrog up
corporate ladders at will, and expendable automatons
with low skills and a pay packet to match. Indeed,
overall salaries in Japan have been on the downtrend
since the 1997-98 Asian currency crisis. But a closer
look at the figures reveals a clear trend of wages
diverging according to industry. Pay packets are getting
bigger in skilled sectors such as the chemical industry
and at financial, insurance and real-estate companies.
But workers in low-skill agriculture, forestry,
fisheries and mining jobs - industries typically located
outside major urban centers - are taking home less.
Knowing that the average wage in rural
communities is comparatively low, large firms such as
photocopy-machine maker Ricoh have built plants in such
isolated areas as Iwate prefecture in the bitterly cold
northern Tohoku region. Business leaders praise such
firms for not relocating to China, but the local workers
who are forced to accept the low pay on offer in the
regions can barely afford to visit their richer cousins
in Tokyo.
In addition to a widening income gap
between skilled and unskilled, and rural and urban,
there is also evidence of growing disparity between
younger and older workers. People aged 60 and older are
estimated to own more than 50% of the total 1.4
quadrillion yen (US$13.6 trillion) in financial assets
held by individuals in Japan, and demand for services
catering to elderly clients is surging.
Many
firms are loath to sack inefficient employees in their
50s who entered the workforce expecting to be suckled
from the cradle to the grave. Instead, companies tend to
wait for them to retire, while opening less entry-level
positions to compensate. Once the company has
sufficiently reduced its number of full-time workers, it
replaces them with part-timers or short-term contract
workers.
Part-timers now make up roughly a
quarter of the Japanese workforce, according to the
Ministry of Public Management and Home Affairs. Firms
generally pay these employees much less than regular
full-timers, and if a worker remains stuck in the
part-time labor pool for more than a few years, the
chances of landing regular employment diminish.
The result is a polarization of incomes into a
group of urban, highly skilled or older rich with luxury
European leather bags and imported cars at one end of
the salary spectrum, and a growing number of rural,
young and job-hopping poor who are forced to shop at
discount stores stocked with cheap Chinese goods.
The growth of French luxury-goods maker LMVH is
an apt illustration of the fortunes of the very rich in
Japan. The popularity of Louis Vuitton bags has enabled
the company to open no fewer than 14 stores in Tokyo in
25 years - in 2003, Japan accounted for nearly a third
of its global sales. In 2002, it unveiled the largest
Louis Vuitton store in the world in Tokyo's upmarket
Omotesando shopping district.
While it is
something of an urban legend that one in three Japanese
women owns a Louis Vuitton bag, the truth is probably
closer to a smaller group of women owning multiple bags.
Underscoring the hot demand for luxury goods, Chanel
this weekend is opening a 10-floor boutique - the
largest Chanel store anywhere - in Ginza, another
high-class shopping area of Tokyo. The new store follows
hard on the heels of the opening of an 11-story building
owned by Hermes just down the road.
In the past
few years, demand for extremely expensive apartments in
central and south Tokyo has soared. This includes a
growing number of apartments priced around $3 million
that weren't on the market as recently as 2002,
according to one real-estate analyst.
One
worrying trend is the persistently high level of
unemployment among Japanese youth. The jobless rate
among the young runs around 10% - about twice the
national average for all workers. The situation is
exacerbated by a mismatch between the types of workers
sought by companies and the job applicants - in other
words, young people don't have the skills Japan needs to
create a vibrant economy.
The Japanese education
system is failing to supply the country with adequately
skilled labor, and the young people who have endured the
rigors of the nation's rote learning system are becoming
permanently stuck in a cycle of low-paying part-time
jobs as a result. These workers are known as "freeters"
in Japan, and many first entered this lifestyle as an
alternative to the grueling long hours expected in more
regular employment. But some are now entering their 30s
and can't find the full-time work needed to secure
housing loans and start a family. The dramatic decline
in the birthrate may be one symptom of how uncertain
this group feels about committing to the economic burden
of bearing children. The birthrate hit as low as 1.29 in
2003 - far below population-replacement levels.
Those freeters who already have children will
unlikely be able to meet the prohibitive costs of
sending them to a Japanese university, thus reinforcing
a vicious cycle of generational low skills that
threatens to create a new sub-class in Japanese society.
Other symptoms of financial stress abound. The
once famously high savings among Japanese households
slipped a record 51% in 2003 as people were forced to
dip into their piggy banks to meet mortgage demands,
educational expenses for children and generally make
ends meet. Those with no money at all in banks or other
financial institutions climbed to a 40-year high of 22%,
according to a survey by a Bank of Japan panel.
Tatsuya Torikoshi, an analyst at the Daiwa
Institute of Research, expects the number of households
with no financial assets to have reached a new high in
2004. The increase of those who lack assets "is most
pronounced for low-income households", he says. This
"may reflect an increase in the severity of the income
environment".
A continuing polarization could rob
Japan of many of the factors that have helped drive the
nation's high economic growth throughout the postwar
era. Worsening inequality is likely to cause less
motivated workers and more social problems. A recent
surge in crime, including violent crime among youths,
underscores the hopelessness many feel about their
personal economic prospects. The statistics on crimes of
property in recent years are particularly telling -
shoplifting has become a problem among the elderly poor
as pensions disappear into debt repayments or gambling
habits. Among juveniles, purse-snatching, robbery and
theft from vending machines are all on the rise. Twenty
years ago, there were expectations the government could
provide a certain standard of living - but today, these
unwritten guarantees are gone.
Government
surveys show a population consumed with anxiety. Two out
of three Japanese have major concerns over the future,
with the percentage rising in younger age groups. The
Cabinet Office cites a lack of confidence among workers
in the nation's social-security system, including
pensions and medical insurance - institutions most
Japanese had previously expected that the government
would generously subsidize for many years to come.
A more alarming symptom of the despair some
Japanese feel about their prospects is the increase in
willingness to put a stop to the misery by ending their
own lives. Since 1998, suicide numbers have ballooned to
more than 30,000 a year, nearly three times the national
road toll - many are said to be related to stress from
overwork as employees put in the extra hours in hopes of
avoiding the next round of corporate downsizing.
Suicides remained above the 30,000 threshold for the
sixth year straight in 2003, setting another all-time
high, according to the National Police Agency.
To be sure, recent data show Japan emerging in
fits and starts from its long economic funk. Gleaming
new skyscrapers continue to pop up on the Tokyo skyline
and luxury-shopping areas seem to open every other
month, but the fruits of that mild recovery aren't
benefiting everyone. At the Roppongi Hills complex, the
largest new shopping region to open in Tokyo in the past
few years, it is said that one in three shoppers doesn't
spend any money at all.
After a long period of
general economic and social equality, Japan is reverting
to a society with distinct layers of affluence, where
some can afford to splurge and others are left to stand
by and watch, wondering if their children will avoid the
slippery slide into poverty.
Bennett
Richardson is a Tokyo-based freelance journalist
with a special interest in Japanese defense policy,
politics and modern history.
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