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Bloated bureaucracy exposed

Book blows whistle on waste of tax cash by public servants

by Colin P.A. Jones

A common joke among some foreigners here is that everything makes sense once you realize Japan is a communist country. However, the role of privileged ruling Communist Party (or, if you have a literary bent, the pigs in George Orwell’s socialist parable “Animal Farm”) is played not by the perpetual opposition party of that name, but by the country’s bureaucrats. For this reason, Japanese government policies that may at first seem crazy often make sense if you ask the question, “What do the bureaucrats get out of it?”

Bureaucrat-bashing is popular in Japan and has generated numerous books, the most famous of which is probably “Oyakusho no Okite” (translated into English as “Straitjacket Society”), written in 1993 by the late Masao Miyamoto, a former bureaucrat himself. Aki Wakabayashi’s recent book “Komuin no Ijona Sekai” (“The Bizarre World of the Public Servant”) shows that despite 15 years of recession and so-called deregulation, things have not changed much. Japanese bureaucrats may live in a bizarre world, but it is one that they have created for their own benefit at great expense to taxpayers.

Wakabayashi writes from experience. Before turning to journalism, she spent 10 years working for a labor ministry research institute. Hired as an administrative worker, she was surprised to find herself receiving written orders to conduct research. Her boss tells her not to worry — it was just a formality since her salary came out of the research budget.

Obtaining and using budgets is a motivator for bureaucrats everywhere, but in Japan it borders on insanity. Shortly before leaving government service in 2001, Wakabayashi was scolded for saving her department ¥200 million — resulting in the danger of losing that amount in next year’s budget. A mad rush ensues to spend the remainder of the budget before the impending fiscal year end (March 31): Unneeded equipment is purchased, and a senior manager takes several favored female subordinates on a first-class trip around the world “to study labor conditions in other countries.”

Travel is just one way to expend cash. The Ministry of Foreign Affairs, for example, has used its budgetary leftovers to buy wine, champagne and expensive works of art. The collective result of this fiscal frenzy is that monthly expenditures by central government agencies go from ¥3 trillion in February to ¥18 trillion in March.

Public works are another good way to get and spend tax money. They also serve as rewards for legislators who rubber-stamp laws the bureaucrats want. As a result, some legislative bodies have become elaborate puppet shows where both questions and answers are scripted in advance by bureaucrats. The elected members of some prefectural and municipal assemblies may even be disciplined for asking questions that have not been vetted by bureaucrats. Even at the national level, it is widely acknowledged that Japan’s Cabinet is primarily an instrument of the bureaucracy rather than the Diet, whose elected members fill most Cabinet posts.

Construction projects are also a way for bureaucrats to appear responsive to the needs of the people, though sometimes the results are bizarre. The infamous Vocational Museum, for example, was built at great expense in a remote part of Kansai, supposedly to help young people become more interested in employment. A similar white elephant was the resort hotel built in Odawara by the Ministry of Health, Labor and Welfare at a cost of ¥50 billion, allegedly to provide a place for the unemployed to have a nice rest. How they were supposed to pay ¥20,000 a night for a room or avail themselves of the famous spa or selection of fine wines while unemployed remains a mystery. The venture quickly became insolvent and was purchased by the Hilton hotel chain for a mere ¥800 million.

Bureaucrats enjoy an enviable range of retirement benefits. Many live in government-funded housing and pay little or no rent. In 2007 government housing in the Tokyo area was about ¥40,000 for a relatively new 63 sq. meter unit (rents are reduced as buildings age). Compare this to an average rent of ¥97,550 for a unit half the size in private-sector housing. Some of the luckier bureaucrats get to live in Roppongi or Kojimachi rent-free, the rationale being that in the event of an emergency they need to be able to walk to work. A housing complex in a nice part of Yokohama (rent ¥20,000 for a 3DK) was built by the scandal-ridden Social Insurance Agency illegally, using citizens’ pension contributions rather than the agency’s budget.

Subsidizing bureaucrats’ housing expenses might be justifiable if it were to make up for them accepting a lower salary than they would get working for a company. Wakabayashi shows that in reality, however, bureaucrats actually are paid more than a lot of private-sector workers. The national average annual income of a local government employee was ¥7 million in 2006, compared to the ¥4.35 million national average for all company employees and the ¥6.16 million averaged by workers at large companies. Their generosity to even their lowest-level employees may explain why so many local governments are effectively insolvent: Drivers for the Kobe municipal bus system are paid an average of almost ¥9 million (taxi drivers, by comparison, earn about ¥3.9 million). School crossing guards in Tokyo’s Nerima Ward earned ¥8 million in 2006. (Such generosity to comparatively low-skilled workers may explain why in the summer of 2007 it was discovered that almost 1,000 Osaka city government employees had lied about having college, i.e., they had, but did not put it on their resumes because it might have disqualified them from such jobs!) Furthermore, unlike private sector companies, public employees get their bonuses whether the economy is good or bad or, in the case of the Social Insurance Agency, even after they lose the pension records of 50 million people (2008 yearend bonuses for most public employees were about the same as 2007, global economic crisis notwithstanding).

In addition to their generous salary and bonuses, public servants get a wealth of extra allowances and benefits. Mothers working for the government can take up to three years’ maternity leave (compared to up to one year in the private sector, if you are lucky). Some government workers may also get bonuses when their children reach the age of majority, extra pay for staying single or not getting promoted, or “travel” allowances just for going across town. Perhaps the most shocking example Wakabayashi offers is the extra pay given to the workers at Hello Work (Japan’s unemployment agency) to compensate them for the stress of dealing with the unemployed.

The many privileges accorded to government workers are to an extent a reflection of the power of their unions. While organized labor is waning in the private sector, it remains a powerful force in the government (here the foreigners’ joke comes closest to reality: Next time you are at a local government office, check out their union bulletin board — the Japanese Communist Party may be the only one that gets any space). The Hokkaido prefectural government, for example, has almost 100 employees devoted exclusively to union activities. Because the government employee union bosses have tremendous power to mobilize in elections, they are a force that politicians ignore at their peril. Union opposition has for decades prevented the implementation of a legal requirement that national government workers receive performance evaluations. The entrenched interests represented by the unions also make change almost impossible to implement. Computerization of national pension records in 1979 was only made possible by acceptance of a number of union demands, including that workers only be required to input the equivalent of three pages of data per day and receive a 15-minute break for every 45 minutes spent doing so.

The perks do not stop when bureaucrats retire. First there is a generous lump-sum government retirement allowance, which averaged around ¥27 million in 2005, almost twice the average for those companies that can still afford to offer such benefits. Such a sum can help buy a nice home in a fashionable neighborhood, or to tide retirees over until they start receiving their pension, which is both cheaper (through lower contributions) and more generous than the pension received by corporate retirees. Former bureaucrats can usually also continue working at their old agency on a part-time basis, or take one of the many other generous post-retirement jobs available in quasi-governmental institutions or industry bodies. Bureaucrats who have risen high enough in the right part of government can become quite wealthy through a series of such “amakudari” posts. For those that want to take it easy after retiring, there are resort hotels built for the benefit of active and former bureaucrats, all constructed with taxpayer money.

With the government being such a generous employer, small wonder that becoming a bureaucrat is the most popular career choice for high school students, according to at least one survey. While all public servants must in theory pass a highly competitive exam, for those cannot there is always bribery. According to one of Wakabayashi’s sources, the going rate for getting a government job in one small town in Akita is ¥3 million. By that measure, the fire chief in one part of Nara who fixed the exam results for 19 of 23 new firemen (including one with an exam score of zero) was almost philanthropic in charging only ¥500,000 a head. He was found out when the police were called to discuss the new recruits’ attitude problem: Having paid their bribe, some of them were apparently more interested in reading comics than fighting fires.

While extreme, this last anecdote is symbolic of the problem Japan’s bureaucracy presents to the nation as a whole. Although Wakabayashi notes that Japan ranks highly in the Transparency International survey of clean government, she paints a picture of a bureaucracy in which a form of systematized corruption has become endemic, and which is so absorbed with growing and preserving its own status and benefits that it may never even notice the fiscal conflagration looming ever closer on the horizon.

Colin P. A. Jones is a professor at Doshisha University Law School in Kyoto. Aki Wakabayashi’s “Komuin no Ijona Sekai” was published in Japanese in 2008 by Gentosha. Send comments on this issue and story ideas to community@japantimes.co.jp