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Japan's middle class being gutted as salaries fall

28 Comments
By Michael Hoffman

When you’re five, life is the huge living room in your new house and the soccer ball in it. “Papa! Now we can play soccer!”

Papa’s heart swells. “Now,” he thinks, “I can be a real dad!”

It’s a long sad story Spa (Dec 13-20) tells. Its title might be "The Death of Japan’s Middle Class."

Two numbers outline the tale. In 1996 Japan’s median annual income was 5.5 million yen; in 2021, 4.4 million.

A year ago “Munetake Yoshioka” (a pseudonym, as are all names in quote marks) worked in sales for a clothing firm, earning, at age 40, 5.4 million yen a year. His wife worked full-time and brought in an additional 3 million. Should they take the plunge into home ownership? They took it.

After that it was one blow after another.

First, COVID-19, then the sinking yen. Two years into the plague, Yoshioka’s company still managed to keep salaries steady. The cheap yen dealt the coup de grace. Last June came the bad news: a 10-percent pay cut. Sales were down, costs up. It was probably inevitable.

The Yoshiokas talked it over, did the math. It was tight but they could manage. “Come, let’s play soccer,” said papa.

Then Yoshioka became pregnant. Other expenses aside, she will need extended child-care leave, at two-thirds salary.

That’s it. There’s no more math to do. They’ll have to sell the house. At night papa sits awake in the dark 18-mat living room-cum-soccer pitch and cries.

That’s a sad story but not tragic. There are many people under bombardment in Ukraine, to cite just one example, who would read it thinking, “I’d trade places with the Yoshiokas any day!”

Would they, however, with “Shunsuke Kijima”? He’s 52. Until July he earned 7 million yen a year working for a tourist bus company. COVID again: tourists stayed home, profits sagged, salaries were cut – “substantially;” we’re not told how much; enough to make him think, “I can’t support a family on this!”

On what, then? Job-hunting at his age is uphill at the best of times – which these are not. Fifty applications to 50 companies yielded nothing, until at last a food processing concern offered him 4.8 million yen a year. He took it. His son starts college next year. His mother, living alone, is in failing health and will soon need care. Hopeless and helpless, Kijima fights a losing battle against despair. “Give me sudden death,” he prays to the powers.

Where lies the boundary between misery and tragedy? “Kumi Sakata,” a 38-year-old single mother, straddles it if she hasn’t crossed it. She and her husband divorced a year ago, leaving her sole guardian of a 6-year-old boy. She claims domestic violence. On her own, she did all right at first. She worked full-time, took home 280,000 yen a month, and received 80,000 a month for child support from the boy’s father. Suddenly in July she was laid off. The support payments ceased – she doesn’t know why; maybe her ex-husband is in similar straits. A desperate job search led at last to a part-time job with a call center. She and her son live on convenience store and supermarket packaged meals past their sell-by dates, therefore discounted.

Maybe that’s not tragic either, if tragedy means only the very worst that can happen to people. Still, Japan is a highly developed country, the world’s third largest economy, and at peace. How have things gone so badly wrong for so many people, in a nation that only recently prided itself on collective middle-class status?

The epidemic accounts for much, but it only accelerated a decline that had been evident long before. Economic journalist Miho Kobayashi, interviewed by Spa, traces the issue back to deregulating reforms of the 1990s. The economic bubble had burst, businesses chafed under rules that bound them to protect employees from market ups and downs, and government responded by loosening the bonds. First to go were restrictions on temporary hiring. Temporary work surged, full-timers were pensioned off and not replaced; the “hiring freeze” that followed created a “lost generation” of largely part-time workers who could do no better for themselves.

Corporate cost-cutting grew compulsive, Kobayashi suggests: “Workers became disposable goods.” A legal amendment aimed at protecting workers imposed a “three-year rule” – temps must be given full-time status after three years. Corporations found an easy way around that, firing their temps just under the deadline and replacing them with others.

Income decline is occurring at “an unprecedented pace,” says Spa. Meiji University economist Yasuyuki Iida sees a “negative spiral” at work: a sinking economy sinks the birth rate, a sinking birth rate sinks the economy.

Is there no hope, then? There is some. Iida sees it in the very sector that powered Japan’s postwar rise from rubble to a mass middle class – manufacturing. The bubble years of the 1980s saw major manufacturers closing down Japanese plants and building new ones overseas, where labor costs were cheaper. The low yen is now driving some of them back home. If domestic manufacturing revives, so might the economy; if the economy, the middle class; if that, the birth rate – turning  the negative spiral positive.

© Japan Today

©2024 GPlusMedia Inc.

28 Comments
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The more I read here, the less I want to be here.

Well done JT!

-2 ( +18 / -20 )

The epidemic accounts for much, but it only accelerated a decline that had been evident long before. Economic journalist Miho Kobayashi, interviewed by Spa, traces the issue back to deregulating reforms of the 1990s.

Japan following the rest of the world from the 80s in neo-liberal reforms that concentrated wealth in the investor/rentier class and disenfranchised labor.

Corporate cost-cutting grew compulsive, Kobayashi suggests: “Workers became disposable goods.” A legal amendment aimed at protecting workers imposed a “three-year rule” – temps must be given full-time status after three years. Corporations found an easy way around that, firing their temps just under the deadline and replacing them with others.

Welcome to the Precariat.

It is truly late stage capitalism as soon with waves of automation adding to the neo-liberalism will mean most consumers have no means to buy a significant amount of goods in the market economy.

5 ( +13 / -8 )

The more I read here, the less I want to be here.

The more I live here, the less I want to be here.

Happily, trade my house, 2 cars, and home gym for an express entry visa for my family and I to Canada.

-8 ( +10 / -18 )

The more I read here, the less I want to be here.

I feel the same way. Problem is, it's not any better in the U.S., where I am from. Well, at least I wouldn't have to wear a mask over there.

-1 ( +9 / -10 )

There is no middle class in Japan, if you get my meaning.

-3 ( +7 / -10 )

A lot of this is the natural evolution of employment as a society develops. Do you really want to go back to the pre-deregulated society? Fighting evolution rarely works out well. Most people on here want Japan Inc. to be reformed. Going back in time would 'unreform' it. Nationalist Soviet-style supply chains will not deliver utopia. They will just turbo-charge costs, prices, inflation and poverty. And wages will never keep pace with inflation. Maybe now Japanese people are beginning to realise the benefits of deflation, despite the endless governmental demonising of it.

If you really feel that you can't afford a child, use contraceptives or morning after pills or adoption.

It is crazy to be so dependent upon one employer, expecting them to protect you for the rest of your life and insulate you from everything that happens in the global economic environment - wars, plagues, social change, idiot governments. Don't be so passive and feeble. Take more control of your life. And start early. Teach kids in school to go on developing their skills through their lives, seeking out new jobs as society changes. Have at least one side hustle/spare skill to give yourself a 'Plan B'. Stop expecting everyone else to do things for you - your government, your employer or your parents.

And fight for the improvement of welfare systems, so they offer a proper safety net for those who need them, helping them find a path back into employment or self-employment. One day you or your kids might need that safety net.

5 ( +8 / -3 )

Coming from me pal.. this is one wild wild take.

I see a lotta words here, some of em I can get it like yea, ok, right on.

Then I look again, all I see it's just a buncha DIY talk.

Pre deregulated = soviet. Yea ok. say no more. More zero rules for looters.

Just say make it plain

We did the first 80 years and now we're goin nowhere fast but everbody else just DIY for 80 more years -we'll pinstripe it!

Japan Inc. to be reformed. Going back in time would 'unreform' it. Nationalist Soviet-style

-1 ( +1 / -2 )

Snake eating it’s tail style of economics doesn’t help. People here are desperate to get out of their age based income brackets or birth place rigged contracts. Everyone knows the system needs to be replaced but everyone’s been indoctrinated to follow and not lead, even the leaders are sad products of this system

3 ( +6 / -3 )

There are hard times out there for lots of people in Japan. Once again though, I think this is another case of a Japanese news article failing to come up with appropriate examples to illustrate what it wants to say.

Let's take the first family.

Main earner 10% pay cut, wife is losing a third while on maternity leave.

Before 5.4 mill plus 3 mill, 8.4 million. After 4.8 mill plus 2 mill, 6.8 million.

According to Japanese mortgage rules for Flat35 etc., they can't have borrowed to the point where repayments are a big chunk (say 40%) of their salaries. Their interest rate will also be fixed and/or extremely low. So a loss of 130,000 yen a month will mean a belt tightening and no savings compared to when they were childless. This should not be a "OMG Sell the house!" crisis. Sell the car maybe, but not sell the house. A Flat 35 loan will be cheaper than renting a comparable apartment and give the main earner mortgage tax relief. This is just melodramatic nonsense. An 18 mat LDK is only "football pitch sized" to idiots.

The thing that annoys me is not that they are inventing poverty in Japan, it is out there for certain. The problem is that they cannot be bothered to go out and find genuine examples of it. The genuine poor are not given a voice.

3 ( +6 / -3 )

The solution is very easy. Helicopter money for ignition of a reinstated bubble economy. But they much more like to burn the megatons of printed money right away, for everything maximum useless, Yen forex stabilization, expensive defense programs instead of qualitative ones, space research, global sports events or expositions and all such similar unnecessary projects out of logic or sense. At the end of it all the higher debts are similar, but wasted for nothing, instead invested in a vivid and stable bubble economy and renewed technological global leadership.

-1 ( +1 / -2 )

I can remember during the bubble times Japan boasted why their economy was so great and they trashed the US economy saying it was on the out. Now we have trouble times in Japan and now they see no way out. SO from the BUBBLE to TROUBLE. I think Japanese in general starting with the government down to the corporations need to start thinking about how to do business. First thing I think should happen is not center all of your large corporations in one area where everyone has to flock to to live. Yes you have manufacturing in the country side but still if companies spread out that would create an infrastructure of business where people can live an work in communities and not live crammed up in the large cities. Use the technology for conference calls if you have an office in Tokyo or Osaka, you can have branches everywhere and the employees and live work and shop in the areas that would spur new growth opportunities, schools manufacturing jobs etc. The bubble years of the 1980s saw major manufacturers closing down Japanese plants and building new ones overseas, they need to bring those manufactures back home and build communities around them and grow the economy there if the people have a liveable wage those things can bring about positive change and perhaps bring new life to families. Again putting everyone in one fish bowl is killing the country!!!

4 ( +6 / -2 )

Not just the Japanese middle class has died, but Japanese elites also feel their wealth getting worse as they are now no richer than the average Southeast Asian elites.

Hell, Southeast Asia will continue minting more millionaires and their wealth will completely dwarf Japan's elites. As a result, Japan's elites have quietly organized capital flights out of Japan massively. No one in the Japanese media reports much on the large scale of shadow capital flights because Japanese xenophobic population will have no choice to stay and live in eternal poverty, comparatively to the rest of the world.

-7 ( +3 / -10 )

Are we supposed to feel sorry for people who overextend themselves and need the wife's salary to pay the home loan while extending their family? They couldn't cope with a one million yen cut in income?

Japan is the new Ottoman empire in full speed decline. If people don't understand this by now where have they been for the past 30 years?

-5 ( +2 / -7 )

I stated in a previous comment about how the strength of the US dollar was destroying middle class purchasing power globally - and this is the key point in that this is happening all over the world due to the strength of the US dollar.

-1 ( +2 / -3 )

The US dollar has increased in value over how long a period? 18 months? Japan has been in decline for 30 years!

3 ( +5 / -2 )

I received my winter bonus yesterday. It was smaller than my summer bonus, despite my company having a good year. I have learned to expect zero, so anything is better than nothing, but still...; no way could I afford to support a wife and kids on my salary, which will never increase in any meaningful way in the future. Why on earth did this couple decide to have one kid, let alone two?! Having kids is only for very well off people these days.

-3 ( +2 / -5 )

Nice. My company of close to 20 years pays less than a "food processing concern".

1 ( +1 / -0 )

Families manage, David Brent. No one should not have children based solely on perceived poverty. Just have to budget and work it out.

Wow. What fantastically irresponsible “advice”!

-3 ( +2 / -5 )

Japanese tend to pay high prices for things not worth it (ex : school uniforms).

They also on average don't accept to buy second-hand stuff, or it is in pretty good shape and (too) high price which is not the principle of second hand.

They hardly invest. Keeping money when economy was going too well and yen overpriced was too easy.

They also keep voting for useless politicians who are cronies, and never demonstrate when an obvious scandal occurs.

Lack of empathy also there is, where no one really cares about their neighbours in cities.

0 ( +0 / -0 )

Fear and loathing

Totally agree with you.

If no children, no future.

Some will learn the hard way when things start not to be as they expected within their own little nest.

0 ( +0 / -0 )

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