As Tohoku struggles to rebuild from last year’s quake and tsunami, money continues to pour into the region in the form of central government subsidies for cleanup, repair and reconstruction.
The result has been a reconstruction bubble providing a massive cash infusion to not only construction-related companies, but also local service industries. People from all over the country are moving into the region in search of work, although concern is growing that once the subsidies dry up, it could face a long and protracted slump.
The following are some questions and answers about the reconstruction boom in Tohoku.
What effect is the rebuilding bubble having on Sendai?
Sendai’s population topped 1 million last November as both residents from other parts of Tohoku who lost their homes in the disasters, especially in the hard-hit ports of Ishinomaki and Minamisanriku, and those from elsewhere in Japan seeking work, move into the city.
The number of empty rental houses and office buildings is dropping. A Miyagi housing developer association estimates that before March 11, there were around 3,000 empty houses in Sendai and the towns immediately around it.
That number had fallen to less than 1,000 by the beginning of 2012. This year, another 2,000 apartment units are expected to be built.
The 37-story Sendai Trust Tower, billed as the tallest building in Tohoku, was only about half occupied prior to the quake and tsunami. However, as of February, it was about 80 percent full.
A central government survey of large Sendai retailers showed that the October-December quarter saw sales rise 9.6 percent compared with the same quarter in 2010.
What about the bubble’s effect on morale and other intangibles?
In and around JR Sendai Station, shops and restaurants are full, and new, modern hotels are springing up, providing needed jobs for new arrivals coming from as far afield as Tokyo and the Kansai region.
The station area shows few scars from last year’s quake. Inside, booths sell dozens of varieties of beef tongue, Sendai’s most famous dish, to the thousands of construction workers, government officials, company executives and volunteers passing through the station on their way to smaller towns hit hard by the tsunami.
Thus, first-time visitors will be immediately struck by an upbeat atmosphere that other cities not as economically prosperous noticeably lack.
Australian Dennis Heazle, a long-term resident, said that for the first time in a long time, consumer confidence is up, although this may be partially because people are also a bit more fatalistic now and figure they might as well spend what they have today because no one knows what tomorrow will bring.
Is it only the area around the train station that’s doing well?
Even more prosperous, especially at night, is Sendai’s Kokubuncho district, home to an estimated 3,000 watering holes of all descriptions.
Hostess clubs in Kokubuncho promise anywhere from ¥3,000 to ¥6,000 an hour plus tips. And an association of “delivery health” sex establishments in Sendai has produced an online recruitment video noting that there are many men in the city at the moment, and suggesting women who work in the sex industry could make far more than the ¥30,000-a-day minimum.
Are the people pouring into Tohoku for construction work getting paid more?
A survey by Miyagi Prefecture last autumn showed that the average daily wage of a road crew worker was about ¥8,000 before the quake, but had risen to around ¥15,000 by last summer, with specialized workers earning much more.
Is it all good news for construction workers?
Yes and no. The Land, Infrastructure, and Transport Ministry noted that there were about 3.1 million skilled construction workers nationwide in 2010, but that a third were over 55 years old and only around 11 percent were under 30. This means a smaller labor pool for many kinds of jobs.
In addition, wages are going up, but the boom has also meant the cost of vital supplies ranging from cement and rental trucks to paint and building supplies is also rising. This increase is occurring at a time when competition to win contracts for waste removal, cleanup and construction projects is growing more intense, forcing the largest contractors to bid as low as possible.
This means the subcontractors are the first to get squeezed, because they have smaller budgets and are forced to trim costs whenever they can or go bust.
To what extent are yakuza involved in the reconstruction boom?
Neither police nor yakuza experts know the extent of mob involvement, but nobody denies they are getting a piece of the action.
Freelance journalist and yakuza expert Tomohiko Suzuki, who worked undercover at the Fukushima No. 1 power plant last summer, estimates about 10 percent of the subcontractors involved with the crippled plant have some kind of underworld connection. The yakuza, he said, are mostly involved in recruiting workers throughout Japan and dispatching them to Fukushima and elsewhere in Tohoku. There are also stories of yakuza buying expensive new German cars thanks to the bubble, Suzuki said.
According to the National Police Agency’s 2011 white paper on organized crime, police departments were issued directions at the end of last March to ensure mobsters were not operating in reconstruction-related industries in the region.
Police departments are also working with 28 construction and waste disposal-related organizations nationwide to prevent yakuza from being hired.
Official confirmation of yakuza involvement is still scarce, though. In July, a leader of a Sumiyoshi-kai affiliate was discovered to have been involved in dispatching workers to a temporary housing project in Iwate Prefecture.
In October, an affiliate of Yamaguchi-gumi was collared for the same reason.
In September, another Yamaguchi-gumi affiliate was nabbed for its involvement in a scam that made use of social welfare funds that had been earmarked for disaster victims in Fukushima.
Are there concerns the bubble will soon end?
With reconstruction now estimated to cost a minimum of around ¥30 trillion, and completion time expected to take years, if not decades, some in Sendai are wondering if the businesses now benefitting will continue to do so.
Masayuki Murakami, who works at an Italian restaurant in central Sendai, worries that too much is being built too fast and that if prices rise, Sendai residents who aren’t getting a piece of the reconstruction pie will eventually stop spending, hurting small businesses like his.
Sendai Mayor Emiko Okuyama is also concerned about how long the bubble will last. She wants to ensure Sendai is not too reliant on central government funding by getting the city officially classified as a special local government that, by law, will have more authority over how to spend its tax money, especially for reconstruction projects.
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