Fundamental shortcomings in the nation’s wealth redistribution policy suggest the have-nots are still being left behind, despite a new report showing little change to income inequality, according to one prominent economist.
A welfare ministry survey, released Thursday, concluded Japan’s economic inequality “has not widened” as per a key gauge known as the Gini coefficient, which measures the concentration of income in a country.
The report showed the Gini index, in which a value indicates the level of inequality with 1 being highest, stood at 0.3759 in 2013 after income redistribution is taken into account, almost unchanged from 0.3791 in 2011, when the ministry last conducted such a survey.
However, the level of inequality was 0.5704 in 2013 before redistribution, which comes in the form of social mechanisms such as tax, charity and public services, up from 0.5536 in 2011.
The ministry said this showed Japan’s redistribution policy had effectively redressed income disparity, translating into a record improvement rate of 34.1 percent.
But Takashi Oshio, a professor at the Institute of Economic Research at Hitotsubashi University in Tokyo, described such a conclusion as misleading, saying the latest Gini index figure hardly points to a successful battle against inequality.
In rapidly aging Japan, Oshio said, wealth redistribution almost exclusively benefited retirees at the expense of the working population, taking place most prominently in the forms of social security such as pension payments and medical fees.
“It’s hardly the case that wealth is redirected from the haves to have-nots as it should be,” Oshio said. Rather, he said, the flow is from the young to the elderly.
In fact, the same report by the ministry showed that while the redistribution rate among the elderly stood at a staggering 267.3 percent, it plummeted to 24.6 percent for single-mother families.
Meanwhile, the report found that post-redistribution annual income among 4,826 randomly chosen households averaged about ¥4.82 million in 2013, down 0.8 percent from 2011.
The decrease suggests Prime Minister Shinzo Abe’s Abenomics program, which started in 2012 and “trickles down” economic benefits from the rich to middle- and low-income households, did not bear fruit at least within its first year, Oshio said.
“The falling average income, coupled with the fact that the post-redistribution Gini index remained almost flat, implies that the Japanese population as a whole is becoming poorer and poorer and at higher risk of poverty,” Oshio said.
“This is not good news at all.”
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