Asia Times: It no longer pays to be middle class in Japan


	July 27, 2000	atimes.com

Japan

It no longer pays to be middle class in Japan
By Christine Cunanan

TOKYO - Recession? What recession? Fund manager Hiroshi Ikeda does not seem to have heard that Japan is still in recession, the longest it has suffered since World War II.

The fortyish Ikeda still reports to his foreign asset management company in a taxicab each day and spends at least 20,000 yen (US$185) on dinner several times a week. He and his family rent a 950,000 yen-a-month ($8,800), four-bedroom flat in the fashionable Shibuya district.

They spend weekends at their country house on the foothills of Mount Fuji, 90 minutes away from Tokyo. They also go on expensive overseas holidays three times a year.

In contrast, Ikeda's former university classmate Yohei Murakami is among the casualties of the recession. According to Murakami, he used to consider himself lucky, though he did not lead a life as lavish as Ikeda's. Although his income as a bank manager did not allow him much luxury, Murakami found comfort in the fact that most white-collar managerial employees earned roughly the same as he did.

He and his family also had no housing worries, living in an apartment that was provided by his bank and that was considered among the most prestigious in Japan. Once in a while, they would join the local district lottery, which offers weekend stays at local government-run lodges at subsidized prices.

Early this year, however, Murakami was made redundant. He has been on a series of short-term odd jobs since, and can only look with envy at the continuing good fortune of his buddy Ikeda.

Murakami is only one among the middle class which used to be a formidable sector in Japan and whose members once took pride in being indistinguishable from one another. But now many of them have joined the growing number of have-nots - while most of the affluent have seen their fortunes rise further.

In other words, the decline of the middle class has resulted in a continental divide among Japan's haves and have-nots. As the lucky few continue to live it up, the majority who have fallen on hard times are wincing at the wide differences between the way they live.

''The rich are getting richer through stock investments, entrepreneurial success or higher compensation packages, and they are spending their wealth on products and services that cater to their class,'' notes one observer. ''Meanwhile, the middle class is experiencing a lifestyle downgrade because of restructuring, pay cuts, and less bonuses. So these people, who form the majority, are making do with much less or much cheaper.''

Indeed, the rooms and restaurant outlets at the Park Hyatt Tokyo, arguably Tokyo's most expensive hotel, are constantly fully booked. But the lesser-grade Daiichi Hotel chains are in serious financial trouble because of huge loans and poor business.

Notably too, luxury retailers such as Gucci and Louis Vuitton are posting high profits in spite of the hard economic times, while some middle-tier retailers such as the Sogo Department Store chain have been forced to file for court protection due to massive losses.

Hiroshi Mikitani, president of Rakuten Ichiba, Japan's most successful online shopping mall, describes recent consumer behavior thus: ''Top-selling items fall into two extremes - the Uniqlo-like (low-end casual brand) products and the Louis Vuitton- like. Products that fall in between don't sell.''

Not surprisingly, a recent survey by the Prime Minister's Office revealed that one in three Japanese believe they are worse off now than they were a year ago. The survey also showed that more than half are unhappy with their current income or assets.

''Almost everyone I know has suffered a pay cut or a drop in their bonus,'' comments Sachiyo Sakamoto, a salaryman's wife. ''And, before, unemployment was just something we read about in the papers but did not really have first-hand experience of. These days, there are even people living in the same building who have had to leave their jobs.''

But what may be more worrisome is a pervading pessimism among many Japanese. According to the survey, only one in 10 Japanese believe their financial circumstances will improve in the future. This could be partly because the recession has turned long-held notions on their heads. In many cases, for instance, the very traits that once ''tainted'' employees as ''different'' in a typical Japanese workplace are now the most desirable.

While having a tinge of ''foreign-ness'' would have worked against an employee in the past, most of those who are currently successful are bi-cultural Japanese who speak a foreign language fluently and who have studied or worked abroad.

Most have either earned a prized MBA degree overseas or worked for at least one foreign firm, so they are valued equally for their knowledge of Japanese ways as well as for their un-Japanese way of thinking and acting.

''Life has never been better,'' confirms Yoshihiro Tanaka, an analyst at a foreign bank. It is his second stint with a foreign company after 10 years with a Japanese bank that paid for his MBA schooling abroad. ''I'm valued for my skills, I can see my career path clearly, and I earn enough to live well.''

Some Japanese view the changes as the result of Japanese society behaving more like the business market environment, where products and services that offer real value have many buyers while ordinary goods are left on the shelves. That, they point out, is not necessarily a bad thing.

''Companies in Japan used to operating on a seniority system, but now they are turning more toward the merit system,'' explains Keiichi Miki, head of Jardine Fleming Asset Management. ''So employees who can prove their value to the company are rewarded accordingly, while the mediocre ones who were once protected by the old system are now judged and compensated based on their performance.''

But Miki also admits: ''This kind of system is good for achievers, but it is bound to create more and more inequalities in Japanese society.''

(Inter Press Service)

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