Commentary / Japan

It's time to face the real risks posed by COVID-19

It has been estimated by the NLI Research Institute that the COVID-19 state of emergency, if implemented through the end of May, would result in the loss of 700,000 jobs, leaving nearly three quarters of a million people without paychecks and their families insecure.

In contrast, the number of people infected with the new coronavirus in Japan remains low — at around 16,000 so far with roughly 800 fatalities. If a new report on the Japanese Red Cross Society's antibody testing of donated blood is correct (0.6 percent showing COVID-19 antibodies), the fatality rate from the new coronavirus in Tokyo is about 0.26 percent.

About 1.2 million people die in Japan every year. No matter how hard people try to obscure the reality, death remains a part of daily life. Then what are we afraid of in regard to the pandemic, what do we seek to achieve, and where society will be led?

My think tank, Yamaneko Research Institute, conducted a nationwide COVID-19 survey of 2,098 people age 18 and older on April 27-28 in collaboration with Platform for Social Innovation. The survey revealed the following results.

The health damage caused by COVID-19 in Japan is relatively low, but the economic and social damage caused by the measures to prevent infections is substantial because both the government and economic entities are paralyzed by fear, and people are overwhelmed by a sense of insecurity about their health.

Nearly 90 percent of the survey respondents said they were concerned about their health, and there was no significant difference among the age groups even though the health risk caused by the virus varies greatly according to age.

This acute feeling of insecurity was partly driven by mass media reports that have fueled a sense of crisis. People who watch TV every day feel the greatest anxiety about their health. Because of such overwhelming health concerns, people across all age groups have consented to changing their lifestyles and the curbing of economic activities.

In the survey, 14 percent of respondents said the impact on the economy does not matter if one life can be saved, and as many as 42 percent said some economic damage is acceptable to save lives. Another 31 percent said efforts to save lives should be balanced with economic concerns. Only 4 percent said the economy could affect more lives so quarantines should be avoided.

The perceived optimal balance between health concerns and the economy did not differ across age groups. This attitude has never been seen with other threats, such as traffic accidents, influenza or North Korean missiles because people rarely harbor fear of such dangers on a daily basis.

Thus it can be said that Japanese people at large have been very cautious and driven by fear regarding COVID-19, but the economic impact has been disproportionate. Most of the newly unemployed people are temporary workers and, as expected, income reductions have hit temporary workers, the self-employed and students especially hard. About a quarter of part-time or temporary workers have sustained significant reductions (some even to zero) in income.

Less than a third of employees have been able to engage in new styles of work such as teleworking, and nearly half of students have lost their part-time jobs. Many Japanese companies are struggling to keep workers employed and a Teikoku Databank forecast showed that as many as 600,000 firms face the risk of bankruptcy within 10 months if no economic measures are taken.

More than 35 percent of households have already experienced reductions in income, while more than 50 percent are expecting income cuts and 47 percent of workers fear losing their jobs. However, people who are worried about losing their jobs are not politically active. Employment concerns tend to lower support for the Abe administration, but do not necessarily increase support for the largest opposition force, the Constitutional Democratic Party of Japan. People with employment concerns are detached from the policy debate, and solid supporters for almost all of the political parties are those who can afford to engage in “self-restraint” for longer periods to avoid COVID-19 infections.

Therefore the divide over how to deal with COVID-19 is not generational, but rather based on class and employment status. The same thing can be said about school closures. Seventy percent of parents in their 20s to 40s feel school closures should end within one month, but only 55 percent of all respondents believe so. In Japan, women still do 80 percent of the housework, according to the latest survey by the National Institute of Population and Social Security Research. It's not difficult to imagine that women bear most of the burden from the self-restraint policy and school closures.

How can society support those people who are suffering from the self-restraint policy? It's interesting to note that almost no politicians insist that economic and social risks from the self-restraint policy are greater than the health risks posed by COVID-19.

In recent weeks, the foremost advocate in the political arena for lifting the curbs on economic activities has been the 44-year-old governor of Osaka, Hirofumi Yoshimura, although he was also among those calling for a state of emergency in the earlier stage of the outbreak. Even though Yoshimura seemed to be aware of the cost to the economy, he did not go beyond the national guideline in seeking to restart economic activities in Osaka Prefecture. No political party sought to correct the irrational self-restraint policy. Some opposition parties have called for greater compensation for workers who lost their jobs or suffered reductions in income, but they did not have the courage to advocate restarting the economy.

The government's economic package was planned in response to the past three to four months of hardship under the self-restraint policy and school closures. Many people have asked for compensation. The principle is not mistaken, but the debate over how much compensation people should get will end up making the aid too little, too late.

The current economic plan might be able to save small businesses, but not medium-sized companies. Earlier this month, major apparel company Renown Inc. became the first listed company to go under due to the impact of COVID-19. In coming months, well-managed companies with decent financial reserves may go bankrupt.

Global hubs like Singapore and Hong Kong probably have a different sense of crisis. In anticipation of prolonged infections and economic damage, each government has greatly subsidized their companies. The world economy is heading into a global recession. Domestic demand has not recovered in countries where lockdowns have been lifted, and external demand is not expected to bounce back for a while. A great recession is expected due to consumer anxieties and declining household income.

The Japanese government plans to compile a second extra budget, but its anticipated scale won't be enough to save businesses. The nation's future prospects are unclear. Many companies will have no choice but to dismiss large numbers of workers or close their businesses. It's time to think about the long-term outlook for the economy and how to coexist in the fight against the new coronavirus.

In early April, many economists agreed on the need to curb economic activities under a state of emergency because they believed the claims of epidemiology model experts and politicians that the situation would be resolved in a month or so, followed by a V-shaped economic recovery. But most economists no longer agree with this scenario.

The COVID-19 crisis was destined to be a long-term struggle once health concerns intensified and the government effectively forced the economy to come to a halt by issuing strong cautions against economic activities. The weakest point of this “Japanese model” is that the economy cannot restart without active political leadership to change the atmosphere. Even after the emergency declaration is lifted, the economy will not recover quickly.

The average public opinion does not represent those people in grave economic pain and those who are the first to suffer. According to our survey, the more vulnerable people's employment statuses are, the more they want an early lifting of economic restraints. Not only have the economic restraints impacted people disproportionately, but the people who are politically active are the ones who can afford to live with the restraints.

Life lost to COVID-19 is no different from life lost to a great recession. Each death is an inherent tragedy no matter what the cause. Developed countries have achieved economic growth in the past while fighting various infectious diseases. Nevertheless, they chose to halt their economic activities in the face of an outbreak of a virus less lethal than tuberculosis. School closures and economic self-restraint are no longer justifiable policies.

Growing public health awareness of the importance of wearing masks, gargling and washing hands is welcome and should become a new standard. Unnecessary business trips or meetings should be reduced. Measures to protect the elderly homes and people with chronic diseases are of the highest importance. But other people need to return to normal life with care. Already, tourism, food service, apparel and education industries are suffering gravely. The situation is more severe for companies and managers who have taken risks and made upfront investments. It is time to reconsider the true risks posed by the pandemic.

Lully Miura is a political scientist and the president of Yamaneko Research Institute. She is a visiting executive fellow at Platform for Social Innovation and was a member of an advisory panel to the prime minister on the National Defense Program Guidelines.

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