Various data show that the income gap is widening in Japan, which has long prided itself on being a nation of equality, free of class struggle.
A new wealthy class has arisen in recent years, despite the bursting in the early 1990s of the economic bubble. Members of this class include such people as dealers at foreign financial institutions and people who have made huge financial gains through such means as the public offerings of information technology businesses.
Meanwhile, the unemployment rate has risen to nearly 5 percent, while more than 1 million Japanese are now receiving state welfare assistance. Within companies, differences in employee salaries are growing, as wages are increasingly linked to employee performance and abilities.
Indexes showing differences in personal income in Japan have been constantly rising since the 1980s. Yet there are many views as to what factors are at work, including that the trend is simply due to the aging of the population.
In Tokyo’s Shiodome waterfront redevelopment area, the Tokyo Twin Parks high-rise condominium buildings are currently under construction. Each 45-story structure contains 33 units called “Sky Houses,” which sell for at least 200 million yen.
All of the units were sold on the day they were offered on the market last autumn, according to the developer, Mitsubishi Estate Co.
Then there is the Park Hyatt Tokyo, in the rapidly developing Nishi-Shinjuku district. Its guest rooms, despite being priced from 49,000 yen a night, are proving extremely popular. “Last year, our occupancy rate eclipsed 90 percent for the first time,” a hotel manager said.
A luxury car made by Toyota Motor Corp., the Celsior, is also enjoying popularity. In a one-month period from the end of August, the car exceeded its sales target for the year, with orders for around 25,000 vehicles.
Yet while luxury products are selling well, Japan’s overall consumption is down. Corporate restructuring, including layoffs, shows no sign of easing, and worries over employment will not dissipate anytime soon.
The number of people receiving state welfare assistance has increased dramatically in the last several years, from around 880,000 in fiscal 1995 to more than 1 million in fiscal 1999.
One index that measures inequalities uses the so-called Gini coefficient, which indicates the dispersion of income among a group of income earners.
Complete equality occurs when the index is at 0, while inequality increases as the number rises toward 1. The Gini coefficient for personal income in Japan in 1985 was 0.36, but by 1997 it had risen to 0.40, according to a survey by the former Economic Planning Agency, a government body merged into the Cabinet Office in January.
Despite discrepancies in data from the various surveys on this issue, they generally indicate a trend of growing income disparity.
“Japan’s egalitarianism myth has been destroyed. Disparities have been widening since the 1980s, and although the differences are not as great as in the United States, Japan has become a nation of unequal income distribution, on par with that in the major countries of Europe,” said Toshiaki Tachibanaki, a professor at Kyoto University.
As for reasons behind the trend, he said, “There has been a shift from the seniority-based salary system to one based on performance. Additional factors include the rapid aging of the population and the development of a ‘winner-takes-all economy,’ in which business profits are concentrated in a small number of successful parties.”
However, Fumio Otake, an associate professor at Osaka University, said Japan’s rapidly aging population is largely behind the trend, calling the situation one of “false inequality.” A comparison of changes of income among people in the same age group, for instance those in their late 30s, over the past 20 years reveals few changes, Otake said.
In Japan, there are only small differences of income between employees who have worked for similar numbers of years or are of the same generation. The differences become more pronounced, however, as these people age. Therefore, the main reason for the increase in the index is that, “Older people, among whom income disparities are relatively large, now make up a larger portion of the population than before,” Otake said.
Kiyoshi Ota, chief of the Cabinet Office’s Social Policy Bureau, agreed. “When the life span of people is examined, the disparities have not widened,” he said.
Yoji Inaba, an official of the Development Bank of Japan, cited the U.S. as an example of a developed country with a large income disparity. “The gaps have widened remarkably since the 1980s, and the trend is continuing,” he said.
As for the reason, the high-tech revolution has caused the middle class to shrink, while computer software has replaced workers in some specialized professions, according to Inaba. Competition from abroad has meanwhile intensified. Inaba said many of these factors are also applicable to Japan.
“There are also factors contributing to a shrinking of the gaps,” he said. “Even so, Japan has committed itself to being a competitive society, and income disparities will rise in the future. Yet that is not necessarily a bad thing.”
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