Japan's slumping economy is taking a toll on workers

Recession, until now almost exclusively the concern of Japan's economic think tanks and corporate board rooms, is reaching out to touch the common man. Signs of this include:

* Wage increases last year fell short of the inflation rate for the first time, and could well do so again this year.Even management admits that many workers have not reaped the benefits of some of the world's highest wage levels.

* The famed lifetime employment guarantee system is weakening, even among the giant corporations that have long been its backbone. When business goes bad, layoffs and even the sack have begun to appear.

* Company bankruptcies are at record levels. As a result, a recent survey of workers found that in companies with more than 1,000 employees, only 47 percent thought future business prospects were bright, sinking to 16 percent for small firms.

* Consumer spending is in the doldrums. Recent Japanese "playgrounds" like Hong Kong report a significant drop in tourist visitors. In the first three months of this year, used-car sales exceeded those of new models for the first time in many years -- significant in a country with a normally low opinion of secondhand goods.

What Japan regards as a recession, other countries in the current world climate of economic uncertainty would probably regard as a fairly healthy state of affairs.

But an economy based on ever more expensive imported energy and raw materials , offset by powerful (and much criticized) export assaults, has to feel vulnerable at any sign of slowing down.

What worries the government and leading economists is that efforts to boost business activity have received so littel reward.The ship of state, it seems, doesn't respond to the tiller as it used to -- a speedboat now handling more like a cumbersome supertanker.

Admittedly, the trade deficit in fiscal 1980 (which ended March 31) was cut to $5.86 billion from $13.45 billion the year before, thanks to a strong export performance. But the giant Mitsui trading house has pointed out that while value increased 23 percent, volume actually stagnated, and Japanese price competitiveness is eroding.

The bulk of Japanese exports are also concentrated in a narrow range and are subject to trade disputes with major partners like the United States and Western Europe (e.g., in cars, electronic goods, automated machine tools). If Japanese companies are forced to restrain their exports to their biggest markets, there is no way to make up in domestic sales.

This is part of Japan's Achilles' heel: the obsessive need to export more to pay for the imported energy and raw materials on which its economic well-being has long relied. Although oil consumption was cut by an impressive 9.5 percent last year, costs rose almost 26 percent, so that fuels now account for half the total import bill.

Japanese utility bills are among the world's highest, driving a number of important energy-intensive industries to the brink of bankcruptcy -- or into overseas operation.

Typical is the aluminum industry, now operating at half of total capacity and unable to compete with a torrent of cheap imports, primarily from the US. It's the car problem in reverse. A quarter of the industry's 80,000-member work force has been laid off, and officials have warned of an "unacceptable high unemployment rate" if the US does not show self-restraint.

The inability to cope with rising costs, combined with the slump in domestic spending, is a prime factor in the fact that a record 18,212 companies went bankcrupt last year.

That this has had little effect so far on a remarkably low unemployment rate of 2 percent is due to several factors. For one, in boom times companies take on many parttimers, who are not reflected in later layoff figures. For another, Japanese industry is now dominated by giant conglomerates with fingers in many pies, so that workers in unprofitable operations can be retrained and moved.

But this has its limits. Japan's future does not lie with labor-intensive industries anymore. Money and high technology, including robots, are the answer to the challenge now being posed by the fast-rising "new Japans" like South Korea and Taiwan, governed by the same puritan work ethic and low wages that this country once enjoyed, as well as comparable product quality.

One recent straw in the wind: A Japanese steel consortium, boasting world-leading technology, was beaten out by South Korea on a domestic order for an advanced offshore drilling platform. Experiences like this are no longer rare.

Despite this, The Tokyo Stock Exchange continues to record new highs, buoyed by foreign investor confidence in future prospects of the Japanese economy.

On this score, many Japanese seem rather ambivalent. Their attitude is summed up by a young housewife, Ichiko Kawakami, who says: "I'm proud when I read about how Japan has become an economic world power. But I certainly don't feel rich. In fact, life or my family has become more difficult.

"We've had to cut down on our meat consumption, dine out less, and have given up our dream of ever owning a house . . . because no matter how hard we save, we never seem to catch up with prices."

You've read  of  free articles. Subscribe to continue.
QR Code to Japan's slumping economy is taking a toll on workers
Read this article in
QR Code to Subscription page
Start your subscription today