Japan Household Income Gap: Updated Nov. 16, 2023.

 

Japan's household income gap remains near record high amid pandemic

Article Source: https://mainichi.jp/english/articles/20230822/p2g/00m/0bu/050000c

Article:

TOKYO (Kyodo) -- The income gap among Japan's households has remained close to the record-high disparity logged in 2014, a government survey conducted in 2021 showed Tuesday, with the coronavirus pandemic likely having hit temp workers hard.

The key parameter for measuring income inequalities, known as the Gini coefficient, came to 0.5700, worsening 0.0106 point from the previous study in 2017, the Health, Labor and Welfare Ministry said. The 2017 figure showed a slight improvement from 2014, when the gap marked the highest-ever 0.5704.

Ideas:

The income gap, or Gini coefficeient, most likely is going to get even worse as many as 70 percent of the Japanese workforce didn't get a wage increase or almost no wage increase. While big companies gave wage increases, many small and medium sized companies did not.

Even going from 0.5704 to 0.5700 is not much of a change and most likely many households related to part-time or contract work didn't see much of a difference.

Japan, it seemed used to have fairly high standard of living among all households. But has changed a lot in recent decades as Japanese companies have been using more contract workers and part-timer workers to save on costs.

Article:

A Gini coefficient of 1 expresses maximum inequality, where only one person has all the income in society. A Gini coefficient of 0.4 is regarded by social scientists as the danger line where income inequality could trigger social unrest.

According to the latest survey that covered income for 2020, when the first COVID-19 state of emergency was declared in Japan, the annual average figure before tax and social security benefits like public pensions across all Japanese households fell 1.4 percent to 4.23 million yen ($29,000) from the 2017 survey.

Ideas:

Social unrest is highly unlikely in Japan, but what is important is consumer demand and consumer spending will be constrained even more because of the income gap among households in Japan.

Japan, unfortunately, has become like most advanced economies where the income gap is getting larger every year. 

Before the Japanese asset bubble collapse of 1989/1990, Japan had one of the highest incomes among advanced nations, but over the last three decades Japan has seen its income gap increase a lot each year. 

Some might say that Japan grew too fast in the 70's, and 80's to where the structure of the Japanese economy couldn't keep up with the speed of change.

What is seeing now is the result of maybe too much growth and too fast of growth as the 1990's 2000's and 2010's has seen less growth compared to the past.

Article:

The ministry noted that the government's efforts to keep unemployment low, among other measures taken during the pandemic, helped prevent the income gap from widening further from the previous survey, which saw the first improvement in 36 years.

Ideas:

The Japanese government might have tried to keep unemployment low, but how many were actually laid off or lost their jobs during the pandemic. And how many of those laid off have found work in the sector they were laid off from, or have they moved in to other jobs in other sectors.

For example, South Korea has an unemployment problem among older workers or those at or near the retiring age. But most want to work, and of need to work.

The South Korean government has been giving these kinds of workers low paying jobs, to make it look like they are employed but in reality they just do menial type work.

The Japanese government needs to do better for it older workforce, and not just give them menial low-paying type jobs to look like they are gainfully employed.

But one good thing about Japan, as Japan has a labor shortage, many older workers are able to find work in the service industry, while in South Korea, service type companies only want young workers.

Article:

The Gini coefficient for "redistributed income" -- net income inclusive of social security benefits -- stood at 0.3813, an improvement of 33.1 percent compared to the Gini coefficient for gross income excluding benefits.

The latest study, which has generally been conducted once every three years in Japan since 1962, was delayed for a year due to the pandemic. It was most recently conducted in July and August 2021 on 8,042 households, of which 3,316 gave valid responses.

Ideas:

Keeping on the same ideas from above with the labor shortages in Japan, many older workers want to continue to work and some service type companies are facing labor shortages, and as such these companies are willing to hire older workers, if they can do the job.

While the salary or wage may not be that good, but maybe they are being productive by working and being around people/customers that their service type company. 

Recently there was an article about some older workers at McDonalds , in Japan, who are still working and still doing the job.

That is not happening in South Korea, as companies only want young workers and they won't hire older workers, who have a lot of experience, and are harder workers compared to the younger generations.

Have a nice day and be safe!