TOKYO — Kenichi Horie was a promising auto engineer, exactly the sort of youthful talent Japan needs to maintain its edge over hungry Korean and Chinese rivals. As a worker in his early 30s at a major carmaker, Mr. Horie won praise for his design work on advanced biofuel systems.
But like many young Japanese, he was a so-called irregular worker, kept on a temporary staff contract with little of the job security and half the salary of the “regular” employees, most of them workers in their late 40s or older. After more than a decade of trying to gain regular status, Mr. Horie finally quit — not just the temporary jobs, but Japan altogether.
He moved to Taiwan two years ago to study Chinese.
“Japanese companies are wasting the young generations to protect older workers,” said Mr. Horie, now 36. “In Japan, they closed the doors on me. In Taiwan, they tell me I have a perfect résumé.”
As this fading economic superpower rapidly grays, it desperately needs to increase productivity and unleash the entrepreneurial energies of its shrinking number of younger people. But Japan seems to be doing just the opposite. This has contributed to weak growth and mounting pension obligations, major reasons Standard & Poor’s downgraded Japan’s sovereign debt rating on Thursday.
“There is a feeling among young generations that no matter how hard we try, we can’t get ahead,” said Shigeyuki Jo, 36, co-author of “The Truth of Generational Inequalities.” “Every avenue seems to be blocked, like we’re butting our heads against a wall.”
An aging population is clogging Japan’s economy with the vested interests of older generations, young people and social experts warn, making an already hierarchical society even more rigid and conservative. The result is that Japan is holding back and marginalizing its youth at a time when it actually needs them to help create the new products, companies and industries that a mature economy requires to grow.
A nation that produced Sony, Toyota and Honda has failed in recent decades to nurture young entrepreneurs, and the game-changing companies that they can create, like Google or Apple — each started by entrepreneurs in their 20s.
Employment figures underscore the second-class status of many younger Japanese. While Japan’s decades of stagnation have increased the number of irregular jobs across all age groups, the young have been hit the hardest.
In 2010, 45 percent of those ages 15 to 24 in the work force held irregular jobs, up from 17.2 percent in 1988 and as much as twice the rate among workers in older age groups, who cling tenaciously to the old ways. Japan’s news media are now filled with grim accounts of how university seniors face a second “ice age” in the job market, with just 56.7 percent receiving job offers before graduation as of October 2010 — an all-time low.
“Japan has the worst generational inequality in the world,” said Manabu Shimasawa, a professor of social policy at Akita University who has written extensively on such inequalities. “Japan has lost its vitality because the older generations don’t step aside, allowing the young generations a chance to take new challenges and grow.”
Disparities and Dangers
While many nations have aging populations, Japan’s demographic crisis is truly dire, with forecasts showing that 40 percent of the population will be 65 and over by 2055. Some of the consequences have been long foreseen, like deflation: as more Japanese retire and live off their savings, they spend less, further depressing Japan’s anemic levels of domestic consumption. But a less anticipated outcome has been the appearance of generational inequalities.
State of the Japanese Economy in 2010
These disparities manifest themselves in many ways. As Mr. Horie discovered, there are corporations that hire all too many young people for low-paying, dead-end jobs — in effect, forcing them to shoulder the costs of preserving cushier jobs for older employees. Others point to an underfinanced pension system so skewed in favor of older Japanese that many younger workers simply refuse to pay; a “silver democracy” that spends far more on the elderly than on education and child care — an issue that is familiar to Americans; and outdated hiring practices that have created a new “lost generation” of disenfranchised youth.
Nagisa Inoue, a senior at Tokyo’s Meiji University, said she was considering paying for a fifth year at her university rather than graduating without a job, an outcome that in Japan’s rigid job market might permanently taint her chances of ever getting a higher-paying corporate job. That is because Japanese companies, even when they do offer stable, regular jobs, prefer to give them only to new graduates, who are seen as the more malleable candidates for molding into Japan’s corporate culture.
And the irony, Ms. Inoue said, is that she does not even want to work at a big corporation. She would rather join a nonprofit environmental group, but that would also exclude her from getting a so-called regular job.
“I’d rather have the freedom to try different things,” said Ms. Inoue, 22. “But in Japan, the costs of doing something different are just too high.”
Many social experts say a grim economy has added to the pressures to conform to Japan’s outdated, one-size-fits-all employment system. An online survey by students at Meiji University of people across Japan ages 18 to 22 found that two-thirds felt that youths did not take risks or new challenges, and that they instead had become a generation of “introverts” who were content or at least resigned to living a life without ambition.
“There is a mismatch between the old system and the young generations,” said Yuki Honda, a professor of education at the University of Tokyo. “Many young Japanese don’t want the same work-dominated lifestyles of their parents’ generation, but they have no choices.”
Facing a rising public uproar, the Welfare Ministry responded late last year by advising employers to recognize someone as a new graduate for up to three years after graduation. It also offers subsidies of up to 1.8 million yen, or about $22,000 per person, to large companies that offer so-called regular jobs to new graduates.
But perhaps nowhere are the roadblocks to youthful enterprise so evident, and the consequences to the Japanese economy so dire, as in the failure of entrepreneurship.
The nation had just 19 initial public offerings in 2009, according to Tokyo-based Next Company, compared with 66 in the United States. More telling is that even Japan’s entrepreneurs are predominantly from older generations: according to the Trade Ministry, just 9.1 percent of Japanese entrepreneurs in 2002 were in their 20s, compared with 25 percent in the United States.
“Japan has become a zero-sum game,” said Yuichiro Itakura, a failed Internet entrepreneur who wrote a book about his experience. “Established interests are afraid a young newcomer will steal what they have, so they won’t do business with him.”
Many Japanese economists and policy makers have long talked of fostering entrepreneurship as the best remedy for Japan’s economic ills. And it is an idea that has a historical precedent here: as the nation rose from the ashes of World War II, young Japanese entrepreneurs produced a host of daring start-ups that overturned entire global industries.
Entrepreneur’s Rise and Fall
But many here say that Japan’s economy has ossified since its glory days, and that the nation now produces few if any such innovative companies. To understand why, many here point to the fate of one of the nation’s best-known Internet tycoons, Takafumi Horie.
When he burst onto the national scene early in the last decade, he was the most un-Japanese of business figures: an impish young man in his early 30s who wore T-shirts into boardrooms, brazenly flouted the rules by starting hostile takeovers and captured an era when a rejuvenated Japanese economy seemed to finally be rebounding. He was arrested five years ago and accused of securities fraud in what seemed a classic case of comeuppance, with the news media demonizing him as a symbol of an unsavory, freewheeling American-style capitalism.
In 2007, a court found him guilty of falsifying company records, a ruling that he is appealing. But in dozens of interviews, young Japanese brought him up again and again as a way of explaining their generation’s malaise. To them, he symbolized something very different: a youthful challenger who was crushed by a reactionary status quo. His arrest, they said, was a warning to all of them not to rock the boat.
“It was a message that it is better to quietly and obediently follow the established conservative order,” Mr. Horie, now 37, wrote in an e-mail.
He remains for many a popular, if almost subversive figure in Japan, where he is once again making waves by unrepentantly battling the charges in court, instead of meekly accepting the judgment, as do most of those arrested. He now has more than a half million followers Twitter, more than the prime minister, and publicly urges people to challenge the system.
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COMMENTARY: Japan is a culture where old traditions go back centuries and considered almost sacred and sacrosanct. When you look at the State of the Japanese Economy 2010, that is enough to give you the willies. No wonder Moody's very recently reduced their credit rating. The sea of debt and government deficits is sad to see, but not unlike that of the U.S. where an aging population of Baby Boomers are placing even more challenges on the economy.
In 2009, China overtook Japan as the number two economy based on gross domestic product (GDP), behind the U.S.
Japan, "The Land of the Setting Sun", as it is commonly referred to, now paints an economy picture that is very unsettling, no pun intended.
The clash of young and old cultures is very prominent, but in a country where old traditions don't die, is due for an overhaul. If this is not done, I can easily see a situation where Japan's economy can come crashing down, disrupting the world economies.
Courtesy of an article dated January 27, 2011 appearing in The New York Times Asia Pacific and an article dated January 27, 2011 appearing in ForexEgg
sad what they become, but they will get better
Posted by: Analysis | 03/19/2011 at 03:45 AM