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In Japan, world’s gloomiest millennials see a future of struggle

by Keiko Ujikane

Bloomberg

Youthful optimism can be hard to find in Japan, where millennials rank as the gloomiest of those in the world’s biggest economies.

While a majority of young adults in its trading partners see bright futures and successful careers ahead, fewer than 40 percent of Japanese do, making them the most pessimistic in 18 countries surveyed by ManpowerGroup. They’re even more downbeat than young Greeks, who have suffered Great Depression-like conditions and political upheaval in recent years.

So much for efforts to eradicate Japan’s “deflationary mindset.” As Prime Minister Shinzo Abe tries to engineer an economic revival, young Japanese are far from bullish. It’s weighing on the economy already and poses challenges for the future.

Japanese millennials face a future of paying to care for one of the world’s most rapidly growing elderly populations, with more than a third of them likely headed for a series of lower-paying dead-end jobs on the less desirable side of the nation’s dual labor market. Then there’s a public debt burden that ranks among the world’s biggest.

Skeptical that the nation’s pension system will be around to take care of them, 20-somethings are already concerned about life after retirement and scrimping to save for the future. Low and stagnant pay is forcing many to delay or even forego marriage, home-buying and child-rearing. About 37 percent expect to work until they die, the ManpowerGroup survey found.

Kohei Ito, 24, said he has no faith that the government will fix problems such as the pension system, which he worries is unsustainable. A college graduate, Ito works in a fitness center, and is thinking about moving overseas to teach sports to children in developing countries.

“I don’t think Japanese politics is going to get better, and I don’t think the economy will get better either,” he said.

Preferring security, young Japanese show little of the “animal spirits” needed to help realize Abe’s vision of a “great entrepreneurial nation.” Younger workers are the least inclined to strike out on their own in more than a decade, according to a survey of recently employed people by the Japan Productivity Center.

“Millennials, if they can, they want to join a major company,” said Daisuke Oya, 23, who works in a cardboard factory as a machine operator. “If you can join a big company when you’re young, it’s more stable.”

That kind of thinking is a “very big concern,” said Randall Jones, head of the Japan-Korea desk at the Organisation for Economic Co-operation and Development. He said young Japanese have a “fixation on working for large companies or the government.”

Changing such attitudes is a key challenge for Japan, which ranks low in entrepreneurship globally, and doing so is necessary to drive the innovation and productivity growth needed to sustain rising living standards as the population shrinks, the OECD says. The country has abundant patents and piles of idle corporate cash, but it lacks enough entrepreneurs to make full use of them, Jones said.

Many young Japanese have cast off the values that drove their parents and grandparents to toil away much of their lives in factories and offices during the nation’s post-war boom years. They say they prize experiences over possessions, and at work seek self-fulfillment and achievement over career advancement. Many surveys find them describing themselves as happy — at least for now.

Yet for many people like Oya, the dream remains basically the same: a stable job that pays enough money to get married and have children. After graduating from a vocational high school, Oya landed a position at a metal-working plant, but the hours and pay fluctuated, so he left recently to work at the cardboard factory.

“My girlfriend told me, if this is all I make, we can’t get married, we can’t have children,” he said. “Honestly, it was pretty shocking to think about.”

Many other young couples have had that conversation. The percentage of men and women in their 20s who want to get married has fallen sharply over the past three years, to 39 percent of men and 59 percent of women, with many citing low pay as the reason, according to a survey this year by the Meiji Yasuda Institute of Life and Wellness.

The source of much of their struggles is Japan’s dual labor market, which keeps wages down while raising job insecurity. It also limits opportunities for employees to develop skills, which in the long term will hurt the economy, according to Hiroaki Miyamoto, a University of Tokyo associate professor.

But public debt may prove the biggest economic burden for Japan’s millennials.

The share of the debt for each Japanese child under 15 stood at $794,000 each as of 2011 — more than 2½ times that of children in Italy and Greece, the two next-worst cases, according to Bertelsmann Stiftung, a German nonprofit foundation. Because of that, and a disproportionately large share of social spending going to the elderly, Japan ranks as the world’s second-most “intergenerationally unjust” country, it said.

Young Japanese are already responding in ways that are dragging on the economy. At a time when domestic consumption has stalled, their savings rate is on the rise, with those 25-34 years old saving a larger share of their earnings than any other age group in 2015, UBS said in a recent report, citing government data.

In fact, most of what little growth in consumption Japan has seen over the past decade has been driven by seniors, offsetting a decline among younger people, UBS said.

The OECD’s Jones notes that just to stabilize the debt at current levels would require difficult choices, likely including raising the sales tax from the current 8 percent, which sits well below the OECD average of about 20 percent, he said. The bulk of that will fall on the younger people who will be around longer.

“So if you’re a working-age person, you can see that there are heavy burdens coming,” he said.