Voodoo Abenomics

Japan's Failed Comeback Plan

Down and out: Tokyo, December 2008.
Down and out: Tokyo, December 2008. (Kim Kyung Hoon / Courtesy Reuters)

Imagine the predicament currently facing a growing number of Japanese men in their early 30s. Despite having spent years cramming in high school and attending good colleges, many can’t find a full-time job at a good company. Since Japan’s rigid labor laws make it nearly impossible to lay off permanent employees in downtimes, companies now tend to fill open slots with part-time or temporary workers, and they typically pay them a third less. Today, 17 percent of Japanese men aged 25 to 34 hold such second-class jobs, up from four percent in 1988. Low-paid temps and part-timers now make up 38 percent of Japanese employees of all ages and both sexes -- a stunning figure for a society that once prided itself on equality.

Prime Minister Shinzo Abe promised to revive Japan when he took office in December 2012, and he often boasts of all the jobs he has added since. But all the gains have been for irregular work; regular jobs have fallen by 3.1 percent. Consequently, the average wage per worker in real terms has fallen by two percent under Abe. No wonder consumer spending is anemic. Imagine as well the frustration of these irregular workers when a low salary thwarts their natural desire to start a family. Whereas 70 percent of Japanese men in their 30s with regular jobs are married, among irregular workers in their 30s, that percentage plunges to just 25 percent.

What counts as a personal tragedy for each worker translates into an economic disaster for Japan as a whole. The country’s reliance on irregular workers eats away at its main resource: its human capital, meaning the skills that enable workers to use the most up-to-date technology and methods. Because irregular workers don’t acquire the skills employers seek, the longer they stay stuck in their dead-end jobs, the harder it becomes to ever get a regular one -- and the more human capital erodes. The low marriage rate among irregular workers accelerates Japan’s demographic decline. That, in turn, amplifies economic strains, such as the shrinking number of workers to support the growing ranks of retirees. 

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