To Find Our Own Way of Surviving in Society ~The Current and Future of the Japanese Economy Which Four Non-economics College Students Reflect on Through Interviews
1. The Challenges of the Japanese Economy and Their Impact on Us (Written by Kim)
Lately, we often hear terms related to the economy such as 'weakening yen' and 'inflation.' It is easy to interpret that the yen is depreciating and prices are rising. However, for someone like me who is not particularly interested in economics, understanding the specific impacts on the Japanese economy can be challenging. Curious about how terms like 'weakening yen' and 'inflation' are affecting the current state of the Japanese economy, we decided to interview Professor Masamiko Ishihara, who specializes in labor economics at Musashino University.
"What are the major challenges facing the Japanese economy, and what impact do they have on our daily lives?"
"Do you know about the 'Lost 30 Years'? It refers to the prolonged economic downturn in Japan since the collapse of the bubble in 1990. Despite some economic fluctuations during this period, a full recovery has not yet been achieved. In addition to the bubble, the aging population is also a significant issue. While aging is more of a social problem than an economic one, the decline in the future working population is a cause for concern. Currently, the labor force is being somewhat mitigated by elderly individuals and women who were previously full-time homemakers entering the workforce. Another related issue is the unconscious gender discrimination taking place. Policies targeting female workers, such as childcare allowances and creating a conducive environment for childcare, have been implemented, but the current situation is not improving smoothly. This is also contributing to the aging population issue. I believe these are fundamental problems in the Japanese economy."
They call the continuous economic downturn since the bubble collapse in the 1990s the 'Lost 30 Years.' Despite various efforts to recover from the recession caused by the bubble collapse, it has become apparent that they have not been successful. Professor Ishihara not only addressed economic aspects but also touched upon social issues such as aging population and women's labor issues. To supplement the declining workforce in the future, solving the issue of women's labor is considered necessary.
"As a problem of the 'Lost 30 Years,' there is a situation where prices are decreasing (deflation). A good economic state is somewhat inflationary, with wages rising along with GDP growth. While one might think that it's not good if prices don't rise, gradually increasing prices and wages are positive indicators of economic growth. In fact, the Bank of Japan aimed for a 2% inflation rate. However, the situation is not progressing as well as expected."
Before interviewing Professor Ishihara, I used to think that 'rising prices are not good,' but I was surprised to learn that a continuation of inflation is beneficial for economic growth. Looking back, with inflation, wages have also increased, and I feel we are relatively better off than before. However, for sustainable economic growth, the rate of wage increase must keep up with the rate of price inflation.
2.
Rising Prices and Yen Depreciation: The Dilemma of the Japanese Economy (Written by Shinkawa)
As college students, we intuitively feel troubled when we hear that prices are rising. Indeed, I myself am exasperated by the rising costs of things I want. I believe everyone feels this to some extent. However, when we broaden our perspective to the entire economy, things are not as simple as they seem. Through an interview with Professor Ishihara, it became clear that from an economic standpoint, the situation is more complex.
"How should we deal with the record depreciation of the yen and high prices?"
"In a deflationary environment, prices fall or fail to rise. Generally, a good economic situation involves slight inflation, where prices and wages both increase, leading to a rise in GDP. It might seem ideal if prices didn't rise, but slight inflation with increasing wages is actually better for economic growth. The Bank of Japan has been targeting 2% inflation, but has struggled to achieve this. They've been trying to 'raise prices, raise prices,' but have been unable to do so."
The slogan of 'escaping deflation' from the era of former Prime Minister Abe is still fresh in our minds. Remember Abenomics? That's what it was. In economics, a bit of inflation is considered a sign of health (the Bank of Japan targets an annual inflation rate of 2%). The idea was that rising prices would lead to higher wages and overall economic activation – the ideal scenario envisioned by the Bank of Japan and former Prime Minister Abe.
"Recently, the situation has changed a bit. Did you know we are moving towards inflation? This is not the inflation that the Bank of Japan was aiming for. The price increases are due to conflicts in Ukraine and Russia, Palestine and Israel. Initially, the war between Russia and Ukraine caused wheat prices to soar. For countries importing grains, this meant having to import at higher prices. This led to global inflation."
In short, the reality was not so simple. External factors beyond control, such as the war between Russia and Ukraine, disrupted Japan's planned storyline. The war significantly impacted global wheat exports from Ukraine, a major exporter, causing global grain prices to skyrocket. Importing countries, including Japan, were forced to buy at higher prices. Additionally, issues in the Middle East led to rising oil prices, contributing to global inflation.
"The need to import more expensive goods has led to price rises, so it's not the inflation where Japan's economy improves and prices rise as the Bank of Japan had hoped. Moreover, interest rate differences between Japan and the U.S. have led to a weaker yen, making dollar-based imports more expensive, further fueling inflation."
This rise in prices is not due to an increase in the value of domestic production but due to external factors. Simply put, expenditures are increasing without a corresponding rise in wages. Additionally, the unfortunate depreciation of the yen is exacerbating the situation. The difference in monetary policies between Japan and the U.S. has increased import costs, further accelerating inflation in Japan.
Professor Ishihara described this as 'troublesome inflation.' In this situation, the traditional theory that price increases lead to economic revitalization does not apply, and it directly affects our lives. Facing the double whammy of inflation and yen depreciation, what should the Japanese economy do to overcome the current situation?
3.Position of Women Workers (Written by Osato)
-Suddenly, do you think Japan has a wage gap between men and women or not?
Which do you think it is?
Japan, along with South Korea, is one of the countries with the largest average wage gap between men and women. Did you know this?
If there is a wage difference between men and women, despite having the same education and doing the same kind of work, it naturally reduces the motivation to work, doesn't it? In order to keep us motivated to work, disparity must be eliminated.
--why is it that disparity is created in the first place?
We interviewed professor Ishihara.
There are many different ways to determine wages, so it is difficult to pinpoint the cause of the gender wage gap by looking at the average, but I think the main cause at this point is the difference in promotions.
The data is available, and it is undeniable that the percentage of female department heads is quite low at 13%, which is a current situation that discourages women, and this may be a problem with decent work in Japan (productive work that guarantees rights, generates sufficient income, and provides adequate social protection). This is a problem of "decent work" in Japan.
In Japan, the speed at which you can get promoted changes just because of your gender.
The author of this article is a woman, and frankly speaking, I feel disheartened when I learned this fact.
However, have women turned a blind eye to this kind of disparity until now?
When things like wage disparity and power disparity are imposed in this way, it is easy to imagine that it is difficult for women to say, "Eliminate the disparity! It is easy to imagine that it is difficult to say, "Eliminate the gap!" but it is also true that it will not be solved unless someone says so.
Whereas..
-- Until now, has there been any effort to eliminate this gender wage gap? Not been done until now?
We asked professor Ishihara.
In the past, efforts to eliminate discrimination against women were actually made in many countries around the world.
In 1979, the Convention on the Elimination of All Forms of Discrimination against Women was adopted and published in 1981.
Countries that agreed to the Convention were required to make a law that included the elimination of discrimination against women and men as proof of their implementation of the Convention.
In order to ratify the treaty, Japan enacted the Equal Employment Opportunity Law in 1985, but this law had a pitfall: there were no penalties for violating it.
Another reason why the wage gap has not narrowed in Japan is the fact that at that time, organizations were created that differentiated between career-track and general employment positions.
Compared to general positions, general positions tend to be routine and supportive, with little involvement in the core business activities that generate profits for the company,
Compared to them, general positions are often routine and supportive jobs, and are rarely involved in the core business activities that generate profits for the company.
It was then established that men were basically in career track positions and women were in general positions.
The Japanese government argued that since the duties of career-track and general positions are completely different, it was inevitable that there would be a disparity in pay, and unfortunately, this still persists today."
I got it. there have been efforts, but each one has its own pitfalls and the pitfalls have not been repaired.
I understand that this is not a problem that can be solved so easily, as it has not yet been resolved, although efforts have been made for quite some time.
However, I also feel that it is not an impossible problem to solve.
Will the day ever come when the wage gap between men and women will narrow?
4.What We Should Prepare for Regarding the Future of the Japanese Economy (Written by Kawatake)
Through the interviews conducted so far, it became clear that there are different discoveries and perspectives on the current state of the Japanese economy depending on one's viewpoint. Even when focusing on a single challenge, various factors, entwined with the influence of corporations and politics, come into play.
In the midst of this, what concrete actions can we take, and what should be our responsibilities as we are about to enter society and bear the weight of the Japanese economy?
--To understand the current state of the Japanese economy and contemplate future challenges and changes, what should we, as university students, be doing now?
Professor Ishihara suggests that studying economics is the most effective way, and she mentioned it is important to discern accurate data first.
Currently, we can easily obtain information by searching on the internet or asking AI. However, have you considered who gathered the data and where it came from?
“The most worried aspect, in my opinion, is that when someone expresses opinions on a blog or elsewhere, even if those are fundamentally incorrect, we might believe them, especially if it's written in an easily understandable and persuasive manner.”
When I listened to these words, I realized that I, too, tended to rely on information summarized in blogs or similar sources, especially in fields requiring specialized knowledge or detailed data.
Just as we might unconsciously assume that textbooks and professors' statements are correct, there's a possibility for us to accept all information, regardless of its accuracy. In contemplating the current state and future of the economy, I felt that the first step in our preparation should be “correctly interpreting accurate data.”
“If something happens, it's important to look at the data, I believe. when you don't know where the data might be, it's crucial to not just rely on what comes up with a quick internet search but to look at government data. You can Check out things of interest on websites like the Ministry of Internal Affairs and Communications Statistics Bureau can be beneficial.”
Professor Ishihara gave the example of the “Monthly Labor Survey” conducted by the Ministry of Health, Labour and Welfare, emphasizing the importance of reading reliable data accurately.
Looking at this graph, my initial impression was, “What on earth does it represent?”. I think many people might feel a sense of difficulty when confronted with such seemingly complex graphs. However, when we learned how to interpret it, it was like scales falling from my eyes.
“Nominal wages refer to the average wage amount as is. It indicates how much it has increased or decreased compared to the same month of the previous year. Real wages, on the other hand, are wages divided by the price level. When the price level is rising, real wages decrease.”
In other words, looking at this graph from October of the fourth year of Reiwa to October of the fifth year of Reiwa, the nominal average wage appears to consistently increase year-on-year. However, due to the high price level, real wages continue to take negative values. This precisely reflects the economic hardship stemming from the disparity between prices and wages.
By reading and accurately interpreting reliable information, such as data presented by the government, we can come to understand the essence of the information. Moreover, we are able to uncover truths that cannot be obtained solely from superficial information summarized in the news or on the internet.
The changes in the economy surrounding us are highly complex, and we may continue to face many questions and challenges. However, these changes are also something that we will become more deeply involved in as we live our lives. It would be beneficial for us not to be swayed by media or external opinions, but rather to develop our perspectives and interpretations, enabling us to determine our approach for the future.