On Saturday, May 2, 2009, the Associated Press reported that the March jobless rate in Japan rose to 4.8%, up .4% from February and the worst unemployment in Japan since August 2004. Americans and Europeans hearing this rate may laugh and say that rate is nothing. Indeed, next to European and American rates, many of which are in double digits, 4.8% looks like paradise.
First, however, Europeans and Americans may fail to understand what 4.8% means. Jiro and Akiko Sato know that 4.8% in Japan is much higher. Optimistic Akiko thinks the American equivalent is probably under 10% while pessimistic Jiro thinks that the number zoomed by 10% long ago. Statistics on this are very difficult to find though, so neither Akiko nor Jiro really know. This 4.8% does not include people who have given up looking for work. This number also does not include married women who are discouraged from participating in the job market for structural and cultural reasons. Many women quit their jobs when they get married or have children. The cost and lack of availability of childcare encourage leaving the workplace.
If the husband works and the wife does not work full time, most husbands also receive a monthly allowance from their employer for their dependent wife and substantial tax breaks as long as the wife earns approximately $10,000 a year or less. Jiro receives an allowance of approximately $200.00 a month as Akiko does not work. Couple this with a system where many jobs demand long hours and it is no wonder that many young married woman only work part-time or not at all. Akiko, with a B.A. from Waseda, one of Japan’s top universities, quit her job before having children.
Then, when their children are older and women like Akiko are ready to participate in the workforce again, good jobs are not available, regardless of the unemployment rate. The Japanese job market offers little for women returning to the work force or senior citizens. Women, especially educated women with skills, have little incentive to punch a cash register at the supermarket or a convenience store if their husbands have good jobs. Instead, many of them spend their time shopping, take lessons in English conversation or flower arrangement, and volunteer. Akiko never went back to work. She was interested in working, but the job market did not encourage her. Now, she does pilates, is starting to learn Italian, and volunteers to help the elderly.
Over the past years, in fact, as temporary work has been legalized and spread, two tiers of employees have emerged: those with real jobs that pay good wages and those who do similar work and receive much less pay for the same job. Married women returning to work often fall into the second category, again discouraging their participation in the job market. Emiko, Akiko’s classmate from high school is not as fortunate as Akiko. Her husband was let go from his job at a gas company due to restructuring and she has to work. She stands behind a cash register for approximately $7.00 an hour.
As if this is not enough of a problem for Japan, prices also fell, reminding Japan of the specter of deflation that has been hovering for years. As unemployment rose in March, prices and spending fell. Industrial production was a small ray of sunlight, rising 1.6 percent in March, the first increase in six months.
The small ray of sunlight in these dark economic times is expected to widen as factory output is projected to increase by 4.3 percent in April and an additional 6.1 percent in May. As Japan’s economy depends on exports, such growth is vital for Japan to return to prosperity. The collapse in global demand has caused the deepest recession in Japan since the end of World War II.
Increasing domestic demand would help the Japanese economy, but structural reasons including insufficient pensions and a system where people are often required to retire years before they can get their quarterly pension payments encourage people to save instead of spend. Jiro will be retiring next year when he hits 60. He will no longer get his $130,000.00 a year salary, but the quarterly payments will not start until he is 65. His lump sum retirement is probably about right for the next five years, but he wants to save that for when he really needs it. So, Jiro will look for a new job. He will be extremely lucky to find something paying $40,000 a year.
He is worrying about finding something due to the very low export rate. When the Japanese economy booms, exports are the basis. When exports drop, so do the economy and job opportunities. Now, exports are dropping and Japan, like all other countries, is feeling the pain. Jiro, like most Japanese men in his position, is wondering if he will find a new job. He is feeling the pain too.