Japan's economic strata degenerates as poor population expands

Since Japanese Prime Minister Shinzo Abe assumed power in 2012, the economic strata of Japan is gradually degenerating to a "pyramid" with the polarization of the rich and the poor becoming more serious and the poor at the bottom accounting for an increasingly larger part of the population.

THE EXPANDING POOR

Statistics from Japan's Ministry of Internal Affairs and Communications show that as of March, Engel's coefficient of families of two or more members in Japan reached 24.5 percent, increasing by 2.6 percentage points compared to three years ago.

In Japan, employees of private companies are seen as "poor" if their annual income is less than 2 million yen. Statistics from Japan's National Tax Agency show that the number of "poor" in Japan reached 11.39 million in 2014, increasing by 45 percent compared to 8.04 million in 1999.

In spite of Abe's gloating about his "Abenomics" economic policy mix and its benefits to the common people, the truth, on the contrary, is that from 2012 to 2014, the number of "poor" increased further by 500,000, instead of falling.

The number of truly impoverished people relying on the government's basic living allowances is also increasing. Statistics from Japan's Ministry of Health, Labor, and Welfare showed that by the end of 2015, the number of families relying on basic living allowances from the government reached 1,634,000, and individuals receiving allowances rose to 2,166,000, both reaching a record high.

Meanwhile, a report by UNICEF in April showed that the relative poverty rate of children in Japan has reached 16.3 percent, ranking 27 among the 34 members of the OECD. This equates to one in every six children living in poverty in Japan nowadays.

Zero-saving families in Japan are also increasing rapidly, despite people's general impression about Japanese families' traditional habit of saving money for a rainy day.

"According to a recent survey by the Bank of Japan, families with zero savings account for 30 percent of the current total, which means one in three families has no savings. The number was only 5 percent in the 1980s," said Kenji Utsunomiya, an attorney at law in Tokyo.

For Toshio Ueki, head of the press service department of the Japanese Communist Party, one of the reasons for the sharp increase of families with zero savings is the nibbling away of the savings of the baby boomers after WWII.

The generation of baby boomers, though having experienced the time when Japan's economy developed rapidly and having sufficient money saved for their later years, now have to help their children and take care of their more elderly parents. As such, more and more of them have sunk into poverty.

"From the working class, to children and senior people, poverty has triggered a chain reaction in society and the poor population is growing," said Ueki.

In contrast to increasing poverty, big enterprises and rich people are having a better time.

Statistics from Japan's Financial Ministry show that the reserved profits of some 5,000 large enterprises in Japan reached 299.5 trillion yen in total, reaching a record high for the eighth consecutive year.

Forbes magazine's Japanese rich list showed that the 40 richest people in Japan owned 15.4 trillion yen in assets in 2015, doubled in the four years with Abe on stage.

THE ABANDONED PEOPLE

Expanding poverty was partly caused by the collapse of the lifetime employment system in Japan, analysts here have said.

Statistics from Japan's Ministry of Health, Labor, and Welfare show that the number of unofficial employees in 2014 reached 19.62 million, accounting for 37.4 percent of the total, increasing by more than 9 million compared to 1995.

"Unofficial employees work longer hours but are paid less. Besides, their jobs are not secure, as they are the first to be let go if anything happens to the company. The increase of unofficial employment is an important reason for the increasing number of poor in society," said Ueki.

Utsunomiya also pointed out that unofficial employees are often paid half the amount of official employees and have no chance of promotion.

A large number of unofficial employees were fired during the financial crisis starting from 2008, which caused a serious social crisis. The OECD asked the Japanese government to solve the problem of employment inequality.

"The Abe administration claimed that the employment situation is improving. But new job vacancies are mainly unofficial ones. The actual wages of Japan have been falling for four consecutive years." Ueki said

"The government even revised relevant laws in 2015 to provide more convenience for enterprises to employ unofficial workers instead of official ones," he added.

Another reason for increasing social poverty is the Japanese government's reduction of social security payments.

With the aging population, the Japanese government is suffering the increasingly heavy burden of making social security payments. An extra budget of 1000 billion yen is required every year to maintain the current level of social benefits.

In 2014, the Japanese government increased the consumption tax rate by 3 percentage points to pay for social benefits. However, only 500 billion yen of the 5,000 billion yen's increased government revenue was allocated to social security payments.

Meanwhile, the government reduced social security standards and thus the common people's burden for medical care, pensions and other social benefits has increased.

Meanwhile, the government has been giving tax breaks to large enterprises and the rich over the past 30 years. "The corporate tax rate decreased from 50 percent in the 1980s to less than 30 percent now. The personal income tax rate for the rich is also decreasing," said Utsunomiya.

"In recent years, the Japanese government has been trying to shift the burden of social security to the common people, and the tax burden for the lower income population is becoming more serious," he said.

To Utsunomiya's surprise, the Abe administration, while cutting down on social benefits, is increasing military spending. National defense expenditure here has been rising for four consecutive years to be more than five trillion yen a year.

THE LOST GENERATION

Japan has lost 30 years of development since the economic bubble burst in the 1990s. Now, the Japanese young people have become something of a lost generation, with little hope for the future.

According to a survey by the Ministry of Education, Culture, Sports, Science and Technology, in 2012, the number of student loan application for college students increased to 52.5 percent, which means one in two college students relies on loans to pay for their tuition and living expenses. In 1996, the number was 21.2 percent.

Behind this is Japan's insufficient investment in education. Statistics by the OECD by the end of 2015 show that Japan's financial expenditure on educational institutions accounted for only 3.5 percent of the GDP, ranking the lowest among OECD members.

Due to the deteriorating job market, many college students could only find unofficial jobs after graduation. Statistics show that the percentage of unofficial employees aged between 20 and 30 is higher than other age groups. These college students cannot pay back their student loans on time due to their low wage level.

Some 330,000 graduates failed to pay their student loans back on time in 2013 and many of them were sued by the government, according to statistics from the Japan Student Support Institute.

"Many graduates consulted my firm about such cases. Between 2005 and 2013, such legal suits increased by 100 times across Japan," said Utsunomiya.

"Japanese society has become one where young people have no hope or future," he said.

"Suicide ranks the first in the causes of death for people aged between 20 and 40, which means one in two died of suicide," he pointed out.

In recent years, a number of criminal cases happened with poverty as the root cause. In 2015, a single mother in Chiba prefecture killed her own daughter and tried to commit suicide the day before being evicted from a public rental house. As an unofficial employee with only 120,000 yen a month, she could not afford the rent.

"Such tragedies caused by poverty are becoming more common in Japan in recent years. Every time I see such cases, I feel Abe's '100 million active society' and 'female active society' are just pretty catchphrases. It's not what Japan needs," said Utsunomiya.