Japan in Perspective: Economic and Social Issues

What are the challenges surrounding Japan today? Where do they come from and how might we solve them? These are questions that thousands of economists and politicians both inside and outside of Japan are delving into answering, and I think that they are questions that are worth looking into. After all, Japan still has the third largest economy in the world, and its soft power is certainly not lacking in gravity.

Many people I know at one point has fallen in love with Japan, whether with its beautiful tourist attractions, its language, its technologically advanced society  or its vibrant popular culture. However, most people pay less attention to the other side of Japan, the one behind the anime and manga that it produces, the one masked by its sakura blossoms and strange toilet seats.

And so, today, we shall be focusing on the other side of Japan; its less pretty economic, social and political realities. This is the first of two posts on modern Japan’s challenges written in collaboration with Jin, an undergraduate student of political science living in Japan.

In this post, we’ll be discussing Japan’s economic and social issues; in particular, we’ll be offering our perspectives on:

  1. The economy and lack of growth
  2. Population and an ageing society

Japan’s Economic Complication from a National Perspective

By Jin

Prime minister Shinzo Abe

One of the most national and cardinal issues that threatens the future of Japan is indubitably the aging and shrinking population. Japan currently has a disproportionate age population–the population of young people tend to fall short in comparison to that of the elderly.  In a country with heavy health care coverage, these circumstances subsequently results in heavy taxes on the younger work force in order to defray the necessary costs. Respecting and cherishing the elderly is an important part of Japanese culture, and I believe that this supportive system has many merits, but it is evident that this imbalance is an obstacle for Japan in both social and economic facets. To tackle these problems, Prime Minister Abe has introduced a policy known as the “一億総活躍社会” (ichiokusoukatsuyakushakai) as a part of the Abenomics process. He even created a new minister position (officially translated as Minister in Charge of Promoting Dynamic Engagement of All Citizens) to ensure that Japan will create a strong and hopeful future for the country. However, birth rates and people’s desire to marry still continues to decline despite these efforts.

One of the most recent Abenomics policies is the negative interest rate. Simply put, this intended to encourage Japanese citizens and businesses to spend more money in order to revitalize the economy instead of storing it into banks, which is thought to be the cause of stagnation. However, considering the fact that negative interest rates only applied to a proportion of the bank’s total amount, this policy was most likely intended to be an experimental policy, and did not aim to achieve a major breakthrough in Japan’s economic growth. Though with a lot of media coverage and recent global instability, there have been voices that people have been reacting too sensitively towards this, thus making the issue much larger than it is supposed to be. Ironically, rather than ameliorating the entire economy, this seems to of have only simulated one corner of the Japanese market: the increase in sales of safes. More people are now buying safes to store their money because they feel more comfortable having their money in their houses rather than keeping it in a bank. In other words, people are currently afraid of spending their money due to the volatility of the future. Past events such as the Bubble Burst and the Lehman Shock have instigated fear within the people of Japan, and as a result people have become reluctant in spending their money even if they wanted to, and have instead chosen to protect their wealth with their own hands.

In the passage below, Ken has not only brought up the economic difficulties, but has also raised the social imbroglios that have largely affected the Japanese society. The points he brings up are, in my opinion, very crucial, and I hope to extend the reader’s knowledge in my reply to his passage that follows afterwards.

Japan’s Struggles from an International Perspective

By Ken

As a person living in Thailand, I’ve long held an admiration for Japan; the same holds true for many Thais. You could call it blind admiration, perhaps, and I’ve talked about this before in previous posts, but there’s a reason to why Japan is so admired in other countries. Japan was ruined so completely and utterly by the end of the Second World War; a few decades later it had become the world’s second largest economy with vibrant cities that captured the imagination of east and west. To many, it is an example of a nation that can fall down and rise back up greater than ever before.

Because of this, I’ve always found it interesting to write about Japan’s challenges. A person who did not know anything about Japan’s political and economic realities would look at its surface- say, at Tokyo or Osaka- and see only the technologically advanced nation so far ahead of many others in Asia. However, anyone who knows about Japan’s economic challenges know that underneath the surface are tectonic plates of a myriad of issues. Indeed, more informed observers know that since the ‘Lost Decade’ of the 1990s, which has now continued well into the 21st century, the economy has stubbornly refused to grow. Prime minister Shinzo Abe has implemented his Abenomic policies to return Japan to growth, but the policies have had little effect thus far. Jin has done an excellent job of covering the prime minister’s various economic policies; I do not wish to cover that once again.

But one area that deserves attention is the potential impact of Japan’s neighbours on her economy. Most notably, China has been experiencing a severe economic slowdown and is no longer able to sustain double-digit growth, which has resulted in a decrease in Chinese aggregate demand for the goods of other nations, causing the impact of its slowdown to reverberate through the globe. As The New York Times writes:

“Japan, more than many other developed countries, needs everything to go right for its economy to grow. Its population and work force are shrinking…With the economy on the edge, even small setbacks can have major repercussions…Exports to China dropped sharply, worsening the falloff in activity and contributing to the general unease.” (Source)

Indeed, at this juncture Japan needs everything to go right for its stubborn economy to grow once more, and this is a challenging time for getting everything to go right. The international economic outlook is hardly promising for Japan, and it would be difficult to remedy this situation; the Chinese government is still trying to muster resources to combat its own slowdown. Perhaps Murphy’s Law is proving true.

But this is a sideshow. Japan’s economic problems persist despite Abe’s success in lowering unemployment and ensuring high labor force participation. Why is this? Most serious of Japan’s economic problems is its issue of stunted population growth. Roughly a third of its population is above the age of 60, which places a huge strain on the Japanese economy; retirement benefits and health care must be ensured for the elderly, as they deserve for their previous service to the nation, but this in turn increases the contribution required from younger taxpayers. This problem is exacerbated by the fact that the pool of people who can work is decreasing; people are getting older, but the young are having less babies: there is simply not enough new workers replacing older ones who are retiring.

Many have suggested solutions to this issue, and one of them is to embrace ‘womenomics’. Traditional and corporate culture in Japan has led to women being an underutilised resource in the Japanese economy, and only around sixty percent of women between the age of 15 and 64 are actually working. The expensiveness and time-consuming process of childcare and the traditional prominence of men in leadership positions are key factors to why the labor participation rate of women are still relatively low in Japan. Abe has argued that a way to offset the decreasing workforce would be to bring more women into the workforce, thus making up for those retiring.  Legislation was passed requiring companies to set numerical targets for how many women they would put in leadership positions, but these womenomics policies has not seen much success. Similarly, policies to try to raise fertility has not been very successful.

“Abenomics is womenomics”

A more profound and controversial change may be required to solve Japan’s population problem. This would be allowing more immigration from outside Japan, giving foreign labourers an opportunity to come work inside the country. It sounds simple, but this would possibly be the most difficult policy to pursue by any Japanese government. For its entire history, Japan has remained an ethnically homogeneous country; to start allowing low-skilled foreign workers to pour into its borders risks damaging the underlying social fabric that has always defined the country.

The Diplomat writes:

Prime Minister Shinzo Abe and his conservative Liberal Democratic Party have been traditionally cold on the idea of accepting more foreigners, citing concerns such as a higher crime rate and fewer job opportunities for Japanese. According to a poll conducted by the daily Yomiuri Shinbun in April last year, a majority of Japanese appear to agree. The survey found that of 1,512 recipients, 54 percent opposed bringing in more foreigners, while only 34 percent receptive to the idea…


…While officials have slowly, reluctantly begun to discuss the topic of immigration, a revealing incident took place earlier this year, when conservative columnist Ayako Sono, a member of an education reform panel in 2013, wrote a “pro-apartheid” column for the conservative Sankei newspaper. Sono conceded that allowing more immigrants to work in Japan would be beneficial, especially in the nursing sector, considering Japan’s rapidly growing population of elderly. However, she continued: “All races can do business, research, and socialize with each other, but they should live separately.” Sono cited a whites-only apartment building in Johannesburg that black South Africans moved into after the apartheid ended, which apparently ran out of water, forcing the white residents to leave, since black people tended to live in larger family units. “Whites, Asians, and blacks should live separately,” she wrote.(Source)

As an observer of international politics, I can draw many parallels. Europe is facing its biggest migration crisis in recent memory; the United States is grappling with the issue of an insecure border. Everywhere, countries with a migration issue is debating whether to accept the migrants. With Japan, the situation is slightly different. Migration has not yet happened, but it is clear that Japan needs it; the question is whether or not to allow it to happen.

Overall, an honest assessment of Japan’s economic outlook would not be rosy. Economic stagnation, demographic decline, an unfavourable international economic situation; this is not a helpful environment for growth. Indeed, Japan’s fundamental challenges are so enormous that it would require leaders with exceptional vision, talent and political capital to navigate through them successfully.

From the perspective of an outsider, however, it would also be foolish to think that Japan would not be able to resolve its challenges. After all, this is a nation that rebounded after the second world war to build the world’s second largest economy. The Japanese people are creative and energetic, and I would be excited to see the solutions that they come up to resolve their current problems.

Now to return to some more comments by Jin:

Touching the Surface of the Social Issues within Japan

By Jin

I am half Japanese–my mother is Japanese and my father is French. Though as a child I lived in the United States for about a decade, and eventually moved to Japan several years ago. I speak English and Japanese, and a little bit of French. In Japan, people like me are generally referred to as “hafu” denoting being half-blooded Japanese, or “kikokushijo” which is used to describe a returnee. My face does not appear to be of Asian heritage, and because of that I have felt somewhat detached from people classified as “jyun-japa” (slang for being pure Japanese, although not necessarily derogatory), whose parents are Japanese and have lived in Japan for their whole lives. By this definition, one must look Japanese and think like a Japanese person  in order to be considered as a jyun-japa. Identity is crucial in the 21st century, and I consider it acceptable and important for people to cherish their own unique race. I personally believe that the classification itself is not offensive, but the term used to describe these people is condemned by not only myself but by other “pure-Japanese” people as well. Another problem that arises here is how foreigners or people such as hafus and kikokushijos (although comparatively lighter) are regarded. One speech given at TEDx Kyoto 2013 accurately addresses the concerns of most hafus and kikokushijos, which can be viewed by clicking here.

Before continuing, I would like to clear the misconception that people in Japan are either simply racist or xenophobic. It is true that they judge people’s nationalities by first-glance appearances, but during my time here I have felt something that is subtly different from simple racism or segregation. Since this is a very delicate and tough issue, I can only briefly touch the surface of this issue in this post, however, I hope to present enough information for the readers to be able to form their own general opinions.

A homogeneous society

I cannot represent Japan as a whole, but most Japanese citizens tend to be benevolent towards foreigners, and adore having them explore Japan’s indigenous values and culture. This obviously applies to other countries as well, yet what differentiates Japan’s conception towards foreigners with other nations is how they tend to regard non-Japanese looking people as completely different people with different values, who occasionally become subjects of admiration for some. It is sometimes because of that admiration or difference that cause most jyun-japas to either take the humble approach (where they admire the person), the defensive approach, or the neutral approach, which is the most preferred in my opinion. Unlike the United States, where your citizenship determines your nationality, the most popular conception in Japan is that your appearance defines your ethnicity. Especially in a homogenous society such as Japan and Korea, people can be dull or insensitive to racial issues because the environment lacks ethnic diversity. This may be one of the reasons that led to the inconsiderate statements presented by Ayako Sono.

Though despite this, I still really like Japan and the people in this country. There is a lot that I can talk about in terms of how I define myself and how I feel in regards to this issue, but that is a topic that I feel should not be tackled at this time. The point of me raising this issue is because I wanted for the readers to understand the social difficulties that envelope Japan in regards to accepting foreigners as citizens of this country. Please do not misunderstand: Japan is a great country to visit for tourism or maybe even a honeymoon. I personally enjoy the historical temples and culture of Japan, as well as the delicious and healthy food. In addition, the slogan for the Tokyo 2020 Olympics was “omotenashi”, which translates to “hospitality”, and the people of Japan are generally known for having very polite mannerisms.  The identity issues that I brought up above may only be of true importance to people who have a desire to fit in or to live in the Japanese society, especially if he or she does not appear or speak Japanese.

Prime Minister Abe has been criticized for only accepting 11 out of over 5000 applicants for asylum to Japan. His response to this is covered by The Guardian, which can be viewed by clicking here, but besides his counterarguments brought up in the article, I feel that Japan would be a difficult environment for Syrians and other refugees to live in just because of the ethnic and language restrictions that have yet to be overcome. Japan is notorious for having one of the worst TOEFL iBT scores in Asia despite being such a prosperous country within the region, and major reforms in English education are being discussed. Of course, accepting a massive amount of refugees may end up being a major breakthrough in terms of global ethnic understanding, but a sudden flow of foreigners may cause a new type of confusion or anxiety never seen before. It may be selfish to not accept refugees into Japan, but for these reasons, I stand with Prime Minister Abe’s stance that this nation is not ready for such a drastic change. Japan has instead given large financial contributions to the United Nations to support these refugees.

With all this being said, the Japanese government’s ultimate goal should be to create a non gender-barriered society in which its citizens can believe in the future and trust the support of the government in regards to child support. A stable society with a proper population balance and gender equity can surely open up new doors towards advancement, and may eventually lead to a less conservative perspective. I consider myself to lean towards a liberal, left-wing perspective, and I sometimes feel that accepting a massive amount of refugees may benefit the society, but when I look at Japan as a whole and the people who live in it, it feels inevitable that Japan cannot move forward regarding the topic of accepting refugees into this country. Most policies implemented in order to tackle the existing socio-economic issues have thus far failed to produce any positive long-term results. Though one thing is certain: it appears that the problematic social boundaries will be put aside until Japan solves its economic issues, where the very answer may actually lie in accepting the lost refugees.

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This brings us to the end of our first joint post together on Japan. In the next post, we’ll be moving away from Japan’s social and economic issues and entering the political sphere to analyse Japan’s relationship with other great powers and its own unclear status as a regional and global player in international politics.

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