Cheap Japan!

[Lothor]

According to this article, Japan is locked in a vicious circle of low profitability, low prices and low wages, which over the last 30 years have led to prices falling to those of an emerging country in some sectors. To add to the article, I recently did a calculation on state pensions, and the full UK pension (received after contributing 35 years) is almost double the full Japanese pension (received after contributing 40 years).

Japan pays a high price as it goes down market - Asia Times

TOKYO – Japan is cheap. Yes, you read that right. This may surprise – or astonish – those familiar with the country’s high value-added brands, its "bubble

asiatimes.com

 

[johnnyG]

Playing the devil's advocate...

Housing is pretty affordable here--purchasing a place. Tokyo is more, of course, but even around there people (including foreigners) buy houses. And outside of one of the major metro areas, it's cheap. One of our kids bought a house (an old one) and it's already paid off (they both work). Friends of theirs here (same high school class) also have houses here (sometimes new--better than ours!). Loans are available and frankly, unbelievably cheap (interest rates). So cheap in fact that the gov't is changing the housing loan deduction--since you could even make money by buying with a loan.

Other places? The US has had a big run-up, Australia is unaffordable for anyone young, Korea, Taiwan, HK, Singapore. Canada also out of reach for many. (I don't know europe, but UK has been expensive for a long time--perhaps why pensions there are more, or need to be more?).

Dinner time, so I'll come back to this later.

 

[johnnyG]

The US averages 6.29 million yen, Germany 5.31 million yen, France 3.69 million yen and South Korea 2.86 million yen. ... But a Japanese graduate's starting salary was 2.62 million yen

I guess for this point, I'd say that the difference is not so much. In Korea, new grads apparently make about ¥20,000 more per month to start. That's not very different, unless there's some arrogance that somehow Japan's salaries should of course be higher than Korea's. Given the higher cost of living, there, that seems about on par to me. Also, if you follow news about Korea, the employment situation there is pretty bad--if you can't get a chaebol job, you're effectively a worthless person.

Part of the low initial salaries here is connected to the way residence tax works (paid in arrears). Your first year working--since you've been a student--you won't be paying much at all in residence tax. Companies know that, and pay low to start, and then give (at least) enough of a raise in the second year to cover the residence tax bill their employees will start paying.

Child care leave. I'm not sure how this works in other places, only the US and here. Europe is probably generous. Our daughter has had two year-long leaves from work (partial salary paid by the social insurance system). She went back to the same company each time--a slot had been held for her, and she still works at the same place. Talk about this to someone in the US and watch their jaws drop to the floor--you could be talking about life on Mars, it's such an alien concept. Both kids are now in daycare--cheap daycare. While parents in the US pretty much have nothing.

And employment in the US--have you heard of the concept of "at will" employment? This depends on the state, but what it means is you can be fired "at will". For no reason at all. Ah, right, but the starting salary is higher...

 

[Lothor]

Playing the devil's advocate...

Housing is pretty affordable here--purchasing a place. Tokyo is more, of course, but even around there people (including foreigners) buy houses. And outside of one of the major metro areas, it's cheap. One of our kids bought a house (an old one) and it's already paid off (they both work). Friends of theirs here (same high school class) also have houses here (sometimes new--better than ours!). Loans are available and frankly, unbelievably cheap (interest rates). So cheap in fact that the gov't is changing the housing loan deduction--since you could even make money by buying with a loan.

Other places? The US has had a big run-up, Australia is unaffordable for anyone young, Korea, Taiwan, HK, Singapore. Canada also out of reach for many. (I don't know europe, but UK has been expensive for a long time--perhaps why pensions there are more, or need to be more?).

Dinner time, so I'll come back to this later.

The relatively generous pension in Britain is because from 2010 state pensions were under a triple lock system, where each year the pension went up by 2.5%, inflation, or the average increase in earnings, whichever of the three was the largest. The system was suspended this year because average earnings went up by 8% in 2021 owing to people ending lockdown, so it was considered too expensive to implement this year.

 

[johnnyG]

I recently did a calculation on state pensions, and the full UK pension (received after contributing 35 years) is almost double the full Japanese pension (received after contributing 40 years).

That's comparing 国民年金 alone? If so, note that many workers (most regular employees?) are also in the 厚生年金 system. And those that are not (self-employed, contractors) have tax-advantaged savings/pension options that regular employees do not, so they can contribute if they have a mind to save for the future (<perhaps this should be required, and not just an option?). With something like this, the "double" thing has no impact. In fact, the 国民年金 part of what I receive is about a third of the total, maybe a little less.

Me, with only 29 years of working here--my pension is equal to what I read that the average social security pension payment is in the US (mine is 国民年金 plus 私学共済年金). From what I've read, that's still not UK-level good, but hey, I'm doing as well as the average social security recipient in the US. And with good health care, to boot!

And, I can live in cheap Japan instead of the U$, avoid it's bickering and partisanship, and the covid numbers, too.

 

[johnnyG]

Jake is looking for clicks. Eyeballs. Pick the most famously known example of low salary--animation--and hold it up as an example. He neglects to compare or point out what computer game developers might make.

edit: He talks about single mothers and poverty in Japan, but neglects to point out how comparatively few single parent families there are here, also that tho they may be at poverty level, they're not homeless or living in their cars, camping on sidewalks around town, that kind of thing.

 

[Lothor]

Do you know what computer game developers make in Japan? I imagine that a small number do well but most are on a low wage as in anime. But I'm speculating. Here's a corroborating article on the poverty of single mothers. Note that there were 1.2 million single-parent households in 2017, most of them headed by a woman with 56 percent of them in poverty, so we're talking about 1 million kids living in poverty. That's completely unacceptable in a rich country.

Japan Is No Place for Single Mothers

The divorce rate has jumped 66 percent in recent decades, but women are ill-equipped financially to raise children alone.

www.theatlantic.com

And saying that at least they are not homeless or living in cars or tents is pretty damn faint praise!

 

[Majestic]

I took the bait and clicked on Jake's article. The nearly three-decade story of Japan's continuing unwinding of the excesses of the late 1980's and very early 1990s is one that deserves a lot of attention, as we can see something of those excesses in the US and elswhere. I am thinking of the white-hot real-estate markets. Young people are virtually excluded from home ownership unless they have family money supplementing their savings. I'm also thinking of Japan's ultra-low inflation environment, and the long-term effects it is having. We can see the US getting into the same trap: people can only afford a super-expensive house if the interest rate is extremely low, and any increase in that rate will cause real pain in many households, and will likely trigger a sell-off, which will cause havoc with local tax revenues, etc.... I'm also thinking of the effects of population decline and an increasingly aging population, and how Japan has an opportunity/challenge to provide solutions that they can then export to other aging economies.

But instead we get the rising sun flag at Yasukuni (does this have anything to do with economics?), anime, and the cliche of all cliches: the Japanese suicide rate.

The story of Japan's post-bubble era is a big fat slowball pitch, and Jake misses it completely by returning to Japanese tropes that are his bread-and-butter.

Japan's "non-regular" employment force has parallels to "at-will" employment in the US, albeit with a bit more stability or predictability than the US. The biggest difference is: non-regular employees in Japan have access to the national health care system. The national health service provides a massive safety net for families in Japan, that simply doesn't exist in the US. "Non-regular" employment is also an avenue for people into the regular workforce: non-regular employees who are employed for three consecutive years must be offered full-time positions (or, if not, they will be considered to be full-time employees by the government, and so they are de-facto full-time employees). Non-regular employees are also free of many of the obligations that full-time workers find so stifling: the unwritten obligations to stay late and come in early, for example. Reducing the argument down to a question of wages paints a very stilted picture.

Then there is his argument about single mothers - which I don't follow. He notes that 87.7% of single mothers are employed, but then uses this as evidence that they "work harder" than single mothers elsewhere. Would he prefer that the employment rate for single mothers were lower? Is he saying that they should not work at all? Then he plays a shell game about suicide and single-motherism, where he throws out the statistic that 70% of of underpaid "non-regular" employees are women, without bothering to investigate how many of those 70% are simply women who wish to work part-time to augment the family's income (while keeping enough free time to allow them to take care of the kids, paint, jog, work out, relax, etc...).

The digression into the suicide rate is just too silly to spend too much time on, but it is a well-trodden path that some writers find too irresistable.

There is a story in there, but Jake was too lazy to find it. Instead, he gave us anime, Daisō, and the rising sun. I'm surprised he didn't throw in a reference to the sex trade, but I feel that somehow he will yet provide us with this article in the future: "Japan's Deflation Dims Kabukichō's Red Light". I much preferred the article in The Atlantic, which spoke about the experience of single women in Japan without leaning on the big book of Japan cliches. It shows the difference between a real reporter, and one who relies on shtick.

Deflation isn't a problem for consumers, but it is a problem for a nation, particularly one that depends on foreign countries for oil and food. I'm interested to see how the US escapes this trap (if it can). Already inflation is running high in the States, and markets are gearing up for a series of rate hikes next year. The real estate markets are showing signs of cooling (kind of). This is complicated by rising oil costs, a mucked up global supply chain, and of course the pandemic.

 

[Grandpa Frank]

I was lucky when I was in Japan(71-72) that 1 US dollar bought 360 Yen. With my regular Navy pay and an extra $80 US for living off the overcrouded base , I felt rich.

 

[salyavin]

Jake is a long time resident of Japan and made a splash with this Yakuza book and some crime reporting. As he once worked for a newspaper I would hope for better but it makes sense in the age going for clicks trying to stay relevant. He just sounds like a parachute in reporter when he is very much not new the country.

 

[johnnyG]

One characteristic of US college grads (probably vs any other country, not just Japan) is the higher level of student debt. I don't have any direct experience with this--only what I've read--but in spite of higher starting salaries there, this seems to be a drag on the ability of young people to get ahead. One of the common things mentioned on the TEFL forums I browse is "can working there (xyz country) allow me to pay off my student loans?" Japan doesn't rank very well on this metric, compared to other asian countries. At least before covid, so this actually reinforces the idea that Japan is a low-starting-salary country.

 

[Majestic]

↑ This is a really good point - I would be very curious to see a comparison of Japanese couples in their 30s versus, say, a US couple in their 30s: things like disposable income, percentage of income spent on housing, healthcare, and student debt, etc... In Jake's article he compares starting salaries, but I feel he has his finger on the scale a bit. "Starting salary" usually doesn't include the twice-annual bonuses that Japanese employees usually receive. I don't think these bonuses would then make the Japanese's salaries equal to their US counterparts, but it would push them much closer. And without any student debt, I suspect the Japanese person may well be ahead of his/her US counterpart.

Then you have to factor in housing, which becomes difficult because so many Japanese young people continue to live with their parents, as is the cultural norm (or, used to be a very solid norm, but maybe it is starting to change). So how to reconcile this? Kids in the US are expected to leave the house. And, it is something of a rite of passage, something to look forward to. But it comes at a huge financial cost.

I do think Japan is likely to continue suffering a brain drain. So many of Japan's nobel laureates now live semi-permanently overseas because their work seems to be more highly valued overseas. I think the same will be true for Japan's engineers, programmers, network administrators, and yes, their graphic artists.

And the article in the Atlantic was spot on with regard to encouraging more participation by women in corporate life. Abe talked the talk, but nobody felt he was serious about removing the many obstalces to participation in the workforce. It will require a bold set of measures relating to childcare, as well as aged care, I think. Well, maybe at a more elemental level, it will require a government that feels these issues keenly. Like the woman in the article who said she started planning early for her life alone, because it gave her more freedom to pursue the kind of life she wanted to pursue - the government would do well to ask these women what kind of support they would like.

 

[johnnyG]

the twice-annual bonuses that Japanese employees usually receive

First year employees typically receive little or no summer bonus. One thing that amplifies this, maybe carrying over to the winter bonus, is that new employees might be classified as trainees for the first two months (eg, april and may). Winter bonus might also be smaller, since regardless of initial trainee/employee status, they were not yet employed for a full calendar year.

And tho it's not ideal, new employees may be offered cheap company housing (perhaps only a dorm room), but it's still a benefit, a with fewer of the typical apartment expenses--deposits, guarantor, etc. To the degree that an employee may be moved/reassigned elsewhere after a year or two, this 'system' can sort of smooth out some costs at the beginning.