Inequality an increasing concern in Japan

More than 90 per cent of Japanese people believe that inequality is a growing social problem, according to a poll released Tuesday, suggesting that concern over income disparity could become an important issue in this summer’s upper house elections.

According to the NHK state television poll, 41 per cent of respondents considered inequality a big problem, while 51 per cent said it was of some concern. Only 1 per cent said there was no problem at all.

Until Japan’s bubble burst, 75 per cent of the population considered itself middle class while relative income equality was regarded as a natural state of Japan’s economy. The NHK poll found only 46 per cent of people now consider themselves middle class, with 14 per cent claiming upper class status and 35 per cent considering themselves lower-middle class or lower class.

Economists say income disparity, while still well below US or UK levels, has increased for several reasons. One is the growing number of retirees, some of whom have generous pension allowances while others rely on a modest state allowance. The number of part-time workers has also risen, from 20 per cent of the workforce in 1994 to 32 per cent in 2004. Corporate profits have boomed over recent years, but wages have remained virtually flat.

Michael Smitka, professor of economics at Washington and Lee University, said a tighter labour market might help close the gap going forward. But there was a danger that several million youngsters who graduated in the five years of corporate restructuring from 1997 might be excluded from better-paying jobs for the rest of their lives, he said.

The experience of countries like Finland, which underwent prolonged recession after the collapse of the Soviet Union, showed that it was very difficult to bring such workers back into permanent workforce, he said.

The opposition Democratic Party of Japan will next week launch a parliamentary debate on the issue and propose comprehensive measures, including labour, pensions, social security and educational reform, as a way of addressing inequality.

The government of Shinzo Abe has appointed a minister in charge of what is called Re-challenge, charged with helping struggling workers find a way back into the mainstream workforce. But the prime minister says he wants to forge a society with equality of opportunity, not equality of outcome.

Prof Smitka said the DPJ would have to work hard to turn angst over inequality to its political advantage. “It’s one of those inchoate issues that requires an opposition that has its act together,” he said.

Political analysts say the LDP faces the possibility of defeat in July’s upper house elections, with concern over inequality one of its weakest flanks. However, the DPJ has a poor track record of exploiting electoral opportunities and depriving the LDP of the political hegemony it has enjoyed for virtually all of the past half century.

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