[OUTLOOK]Japan’s problem, Korea’s future

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[OUTLOOK]Japan’s problem, Korea’s future

Japan’s economy is enjoying its best time since the end of World War II. After hitting bottom in January 2002, a boom has lasted for 60 months. In the past, the economy depended on public investment. Now private consumption and corporate investment in equipment are leading the recovery, which is certainly desirable and healthy. In terms of figures, it couldn’t be better. Japan’s six major banks did very badly during the “lost decade,” but saw profits of 3 trillion yen ($25 billion), last year. Large manufacturers have seen record-high profits. As their restructuring pays off and the yen is weakening, Toyota Motor, for instance, has recorded net profits of 1 trillion yen for four straight years.
But few Japanese feel this boom. Research shows that 77 percent of Japanese companies don’t think the good times will last. More than half of companies are worse off, in particular, as their output is overshadowed by that of a few conglomerates.
Pressure to reduce production costs lies at the core of the problems. As competition becomes increasingly fierce in the era of globalization, conglomerates exert pressure on smaller companies and parts manufacturers to lower prices. Thus, large companies have more chances to increase profits, while smaller ones see less.
The case is the same or worse for ordinary working-class people. First, wages have been cut. The economy has been improving for the past five years, but the total amount of wages in cash hovers at the 97 percent level of what people were once paid, even though companies’ ordinary incomes have increased by more than 1.7 times per worker during the same period.
The quality of employment has worsened. On the outside, the unemployment rate has gone down significantly, but the number of regular jobs has shrunk, increasing the number of irregular jobs instead.
Due to these factors, working-class people do not believe that the economy is in good shape. Japan’s economy has serious imbalances. Resolution of the polarization of society has surfaced as one of the country’s most urgent issues. That does not simply mean that the benefits of development are not fairly distributed among all people. The polarization leads to other serious problems.
For instance, if most people do not feel that times are good when they really are, individual consumption hardly increases. Experts are worried that sluggish consumption will eventually slow down the Japanese economy.
Others point out that polarization is reproduced through generations and harms the security of the society. Japan has a serious problem with people under the age of 35 who have to move from one part-time job to another. In the age spectrum from 25 to 34, a million people work as part-timers at different places. Most of them suffer from job insecurity and low wages. Many of them cannot get married, or even if they do, many end up being divorced. Many children of these parents do not get accustomed to school life and cause trouble in class, according to research. That means poverty is handed down from generation to generation, causing a collapse of the family structure and insecurity in society.
Japan is seeking answers to these problems. The central government set up the slogan, “A society where a second chance is given,” and placed easing polarization on its agenda.
Local governments have started to help youths to find jobs. Some non-profit organizations have worked with those governments to provide assistance to those who cannot find jobs. Conglomerates and labor unions also are taking part in this move. An increasing number of conglomerates realize the importance of their relations with small and mid-sized companies. Some companies figured out that an increase in irregular workers would not benefit the companies in the long run, so they are increasing regular positions.
Japan has been five or 10 years ahead of Korea in most fields, so we can probably see ourselves in five or 10 years when we look at Japan. But the issues of polarization and irregular workers are occurring at the same time both in Japan and in Korea. In every corner of society, the Japanese are preparing to solve problems. The issues are gaining a social consensus.
Fortunately, in Korea, some banks have been turning their irregular workers into regular ones. Entrepreneurs from companies of different sizes meet at the Blue House and talk about coexistence.
In order for Korea to become an advanced country, there is no more important thing than to achieve a 5-percent growth rate and to reach a social consensus to solve the social polarization problem. In that way, we can pursue sustainable development. That is what we have to learn from Japan.

*The writer is a professor of economics at Saitama University, Japan.

by Woo Jong-won
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