The great deflation of Japan

In Japan, Young Face Generational Roadblocks

NY Times

January 27, 2011

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.

"Yay! We have no future prospects!" 

“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 the nation’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.

...

“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.”

A couple months ago I volunteered for this cultural comparative business class (taught in English) at Waseda  and at the end, all the volunteers were asked to give a little power point presentation expounding on some key points; this being one of them. In America, about 80% of our economy is made up of small business; the remaining 20% being big corporations. Of course only about 5% of those small businesses make it successfully past the 5 year mark but still, once one business falls three more are being created and many great innovations have come out of Americans taking the risk (Apple, Microsoft, those traveler boxes you can get your Starbucks coffee in). When we brought this up in our presentation, the class room was shocked. Japanese students go to university to get a good job at an already established company whereas American students go to university, get an idea in there head, go for it and then maybe graduate, maybe not; depending on how the business venture goes (of course this doesn't apply to everyone). There are no entrepreneur classes/majors here in Japan, and to me it seems next to impossible to be an entrepreneur here.

He's the Bill Gates of Japan

In another of my own classes I was taking (brain and cognition; a social look at brain science), my professor (who is Japanese) brought this topic up of how Japan is lacking in great innovating minds. He mentioned that (in his opinion) one of the last, most recent people to really make a difference (and become successful in this country) is the CEO of the cell phone company Soft Bank, Masayoshi Son; and he's not even Japanese, he's a third genner Korean living in Japan! 

I have friends who are working as these "irregular workers", and other friends who are going through the awful job hunting process here that takes place in your junior year of university. All of them tell me how bleak their prospects are looking and that they don't know what to do. 

So why is Japan like this? Is it all the old people's fault? Should we have a Battle Royal with the old people (and the winner gets to live out the rest of his 10 years) to make way for the younger generations? Or is it a laziness on the part of the younger Japanese people? Is it fair to compare them to Americans considering how well (sarcasm~) we're doing at the moment. What do you think? Leave your comments!

PEACE OUTSIDE

Jamie