OECD Economic Survey on Japan 2005

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I just read the OECD Economic Survey on Japan from this year which highlights the “key economic challenges” facing the nation over the next decade. This sentence from the conclusion generally sums it up:

While the Japanese economy is in its best shape since the early 1990s, the basis for comparison — the weak economic performance of the last decade — does not set the bar very high.

This report estimates Japan’s future growth rates at the meager 1.3% a year, and Japan will only keep up with the other countries’ per capita income gains if it can maintain high working hours (already 8% above the OECD average), increase labor force participation rates (which the low birth rate is making difficult), and boost labor productivity to 2.5% (Japan’s labor productivity is infamously poor).

Japan’s per capita income has fallen to 75% of that the United States, even though the per capita incomes of other OECD countries have been relatively stable. Increases in private consumption will only follow gains in income, which means that consumerism isn’t likely to return to early ’90s levels anytime soon.

The report sharply criticizes the new Japanese employment practice of hiring temporary “non-regular” workers at much lower salaries and less job security. Apparently, there is little difference in productivity between the regular and non-regular workers, and non-regular workers have a difficult time moving to regular employment. In other words, the male elite students hired as permanent employees get 60% larger salaries for doing essentially the same amount of work as those with less prestigious backgrounds. This will obviously create a substantial income disparity in the future. On top of that, most skills come not from the educational system, but from firms’ in-house training, which means that non-regular workers seriously lack human capital.

Greater female participation in the workforce could be beneficial to the economy, but the fact that women make up 2/3 of the lower-paid, non-regular workforce is not providing economic encouragement for their mobilization.

Another interesting statistic: Workers aged 15 to 24 show a 10.1% unemployment rate and more long-term unemployment than the other OECD countries.

What does this mean for Japanese pop culture? Consumerism will most likely not be on the rise anytime soon, so I would doubt that the fashion, music, and media markets are going to boom in the next decade. There will, however, be a new class of wealthy youngsters, and if they max out their pocket money, this could create a visible class-based rift in cultural consumption. Until now, pop culture and semi-subcultural practice in Japan have been defined predominantly through consumption, but a possible saving stroke would be the shift from shopping/buying as the main youth activity to non-commercial producing/creating. Tradition suggests that this shift is unlikely, but I would not rule it out.

Marxy wrote a lot of essays back on his old site Néomarxisme. This is one of them.

18 Responses

  1. Chris_B Says:

    I work for one of the large well known financial conglomerates, they are shifting all their employees off of full time employment to yearly contracts. I noticed a year or so ago that my contract had changed so that I have to work 35 hrs extra per month before I’m eligable for overtime pay, however my contract now says that those “first 35 hrs” are included in my salary. Essentially more work for the same ammount of pay. Also we use lots of temp staff, but sometimes they are moved into “regular” employment.

  2. graham Says:

    Consumerism will most likely not be on the rise anytime soon, so I would doubt that the fashion, music, and media markets are going to boom in the next decade.

    I don’t disagree with you here, but I wonder if a low prospect for a rise in consumerism really indicates a lull in pop culture. At least when it comes to the more “underground” sort of stuff, the production and distribution costs are falling because of desktop/laptop production and publishing, and scalable distribution online. Perhaps you’re right, and the classic consumeristic pop culture might take a hit, but perhaps all these unemployed younguns will produce equal or greater amounts of cultural material than we’re used to.

  3. Japanese Business Digest Says:

    icture simply that Japan has, at least for now, forestalled the creative destruction that would be the precursor for any *true* economic correction? By tweaking here and there, hiring a few more temps now and then, writing down the occassional bad loan, Japan has avoided the painful, society-altering recession, that, for example, the US faced in the early 90s (remember: Ross Perot got 19% of the presidential vote in 92 due to discontent about things).

    Sure, for younger people jobs have been scarce, but 10% unemployment isn’t catastrophic, especially if you can live at home for free. If back in ’92~’94 Japan had taken the plunge, things might be different today.

  4. Sameer Says:

    My understanding was that when the バブル時代 ended around 1992, there was a very painful economic readjustment in Japan as a lot of wealth tied up in land disintegrated. Conversely, the US recession from 1990-92, though sucky, was not “society-altering”; the unemployment rate never climbed above 8%. Not sure why Perot was quite so popular; I suspect a lot of conservatives were pissed off about the “no new taxes” thing.

    In the classic Solow economic growth model, the growth rate of income-per-capita (in steady state) depends solely on the technology growth rate. Of course, this is a VERY SIMPLE model and there are more complex iterations, but the basic question is: how much innovation is happening in Japan? I’m sure David has some thoughts on this…

  5. marxy Says:

    the classic consumeristic pop culture might take a hit, but perhaps all these unemployed younguns will produce equal or greater amounts of cultural material than we’re used to.

    One of my main thoughts about Japanese culture is that all the culture is just consumerism, even the “underground” stuff. Any of the hobby magazines are as consumer-oriented as the fashion magazines, and the nobodies playing at live houses every night are dead serious about selling their demo CDs. There is very little of art-for-art’s sake, or conversely, everyone feels like they need market success to “legitimize” their art (mainly because there’s no subjective reviewing about.) And no market success for anyone right now is really messing this whole system up.

    If back in ’92~’94 Japan had taken the plunge, things might be different today.

    It’d be very different in the sense that they would have had to basically eradicate all the institutions that we all consider fundamental to the “Japanese” socio-economic system. Instead, the structure will just decay year by year with litle government guidance.

    If Japan goes by tradition, it could always claim a crisis and radically re-alter the whole society from the top. However, those in power are concerned solely with staying in power, not fixing anything. With essentially no threat of revolution in Japan, they have all the time in the world…

  6. Momus Says:

    One of my main thoughts about Japanese culture is that all the culture is just consumerism

    That would lead to crass economic determinism if you weren’t also willing to consider that in Japanese culture all consumerism is also cultural, or even religious. When I first came to Japan in 92 I was surprised by both those impressions: I was playing concerts in department stores, and visiting museums in department stores. But department stores were not department stores as we know them in the West. The way you were greeted, the way products were presented and wrapped, even the way people shopped and sold things contained a lot of what we in the West separate out into religion and art. Everything was in a different place.

    So reduce everything to shopping if you like, but don’t reduce shopping to the international language of numbers, because it proceeds differently in Japan and contains surprising things. Don’t use it as a way to dismiss the culture it encodes; that would be like saying that Japanese food is “just calories”.

  7. marxy Says:

    I was playing concerts in department stores, and visiting museums in department stores.

    But you’re not taking these to any obvious point of analysis: art and culture in Japan exist almost solely within the commercial sphere of market exchange and their value is socially determined by its exchange value, not any concepts of subjective inherent value. If world-famous Momus has no record sales nor write ups in magazines and does a show on the street, he could not be possibly be worth watching.

    And the economic deterministic factor comes in when the market can no longer sustain the creation of commercial environments to legitimize art. There are less consumers total and they’re spending less, and that means there are fewer likely to buy “fringe” goods (like a Momus CD). Dep’t stores are then less likely to make non-profitable museums or boutiques dedicated to fringe/avant-garde goods. And since culture cannot exist in Japan outside of the commercial market, this means less culture in total.

    So reduce everything to shopping if you like, but don’t reduce shopping to the international language of numbers

    I agree: shopping is more important to the Japanese than the West. And if this is true, the logical question to be asked is, does a massive drop in shopping/consumerism mean a massive failure of Japanese society?

  8. Momus Says:

    There are less consumers total and they’re spending less, and that means there are fewer likely to buy “fringe” goods

    This is not a very complex model of consumer psychology. For a start, you’re looking at trends rather than the big picture, which is still that Japan is the world’s second largest economy, and its consumers are adventurous — you just have to look at the range of products available in Tower Records, or the gadgets in Akihabara to see that much more is on offer in Japan than anywhere else in the world. Secondly, you’re looking only at negative trends. If you google the phrase “consumer spending in Japan” (no quote marks) you’ll find that all the top hits are how consumer spending is up, and a recession has been avoided. Thirdly, you don’t take into account that consumer confidence and spending is a question of human psychology, therefore complex. There isn’t really a proven link between wealth and happiness — rich nations like Sweden and Japan have the highest suicide rates. Does a downturn in the economy mean everyone buys comedy records to cheer themselves up, or Radiohead records to confirm how miserable they are? Or do they, like me, go out and buy secondhand Portugese children’s highway code records on vinyl, boosting Cash Converters stock? Nobody knows. People are much more perverse and unpredictable than you seem to be suggesting, and the link between economy and art is really not as clear as you assert, even if they seem to line up perfectly from fixed viewpoints.

  9. marxy Says:

    All of your examples are possible but none of them in any way describe what is going on in Japan.

    1) The anti-major indie/avant-garde/fringe market has totally evaporated. You can feel it on the street, see it in the store closings, and hear it from members of that scene. With music and fashion, all the original 90s artists’/brands’ sales are way down and no one new from the scene has risen to take their place. As this market contracts, most large firms are shifting resources elsewhere, so there’s a lot less corporate money going into more innovative and adventurous products.

    Japan still may offer more than any other place in the world, but this is largely a residue from the 90s cultural boom, and the Internet has allowed many other countries to catch up.

    2) As the OECD said, Japan has avoided recession, but the current economic situation only looks good compared to the past ten years of bleak deflation. Spending is not especially up, and will almost certainly not go back to mid-90s rates. The good news is just that’s it’s not falling any further. Unless you’re not on the elite track – then you’re totally fucked.

    3) Thirdly, you don’t take into account that consumer confidence and spending is a question of human psychology, therefore complex.

    Well, there is an economic threshold. You can say that the Japanese love $750 camo jackets but that’s only when they have $750 to spend.

    4) People are much more perverse and unpredictable than you seem to be suggesting

    Well, they are all perversely deciding not to buy anything fringe anymore on a very large scale.

    This is one of those times that I wish you were right, I wish that the economic situation had no effect on a nation’s cultural output, but they seem to be highly correlated. As I said in the essay, if cultural creation can somehow be untied from economic/commercial concerns, there is a chance of kids making interesting things just to make interesting things.

  10. Dave Says:

    With regards to the pay and employment, I suspect that what is really happening is that Japanese companies are avoiding pension plans (which aren’t expensive if you’re growing, but are really expensive when you stop – just ask US airlines, GM and Ford, whose pension liabilities alone could sink them), and trying to start controlling the amount of money they spend on the workforce.

    Hopefully this will soon lead to them thinking about how to improve productivity, which would be great. When I spoke to a Japanese friend recently who has worked in bank back-offices in Japan, she mentioned how much time was wasted with ‘real paper’ copies, admin work etcetera.

    In theory this means your bank can fire some people, pay out their wages as profits to the shareholders, who will (in a Momus-friendly world) go out to department stores to consume productised art (which in a perfect world would be produced by recently ‘risutora sareta’ financial services workers.)

  11. R J Lee Says:

    Here’s a bit of anecdotal evidence of the point Marxy is making about art being a comodity:

    I’m a “fringe” musician in Osaka, and have been doing shows, mostly in Osaka, for several years. My band has two CDs out, and for a while, we were trying to sell them at shows for US indie label prices–800 yen.

    We sold none. For about half a year, we sold zero CDs.

    Then a Japanese friend who used to run a small label suggested that we up the price. I took his advice and priced them at 1700 yen at our next show. We sold 30 that night (good for a dinky little live-house in Osaka), and have done almost as well every time we’ve played since then.

    Apparently my music has no value other than its percieved market value.

  12. R J Lee Says:

    I have to agree about the wasted time on ‘real paper’ copies as well. I work in a Japanese style office (I’m the only non-Japanese), and I often feel like I spend more time documenting the fact that I have completed a task than I actually spent on the task itself.

  13. graham Says:

    if cultural creation can somehow be untied from economic/commercial concerns, there is a chance of kids making interesting things just to make interesting things.

    This was partially my point about the lowering cost of production for digital arts. If a couple of buddies can hack together a passable track with spare time and a pirated version of protools (or their free 8-track version, if that’s still around), why wouldn’t the commercial flop be a boon?

    I consider the downward spiral of U.S. record labels over piracy beneficial, if it continues, because it promotes non-market-tested music. For all the hollering we’ve had on here about Pitchfork’s particular taste, I sure prefer its selection model (Ryan Schreiber and his buddies listen to shitloads of CD’s and write what they think) to the Clear Channel and Viacom (MTV, VH1, CBS) way.

    Is there something I’m missing that prevents this from being the result in Japan? What if furiitaa use their spare time to self-produce music?

  14. marxy Says:

    why wouldn’t the commercial flop be a boon?

    How does an artist in Japan get his/her art validated and legitimized? There’s no reviews, so it almost falls completely upon market success. Kids aren’t “doing it for the money” but if no one buys their stuff, they feel like they’re not being well-received. There’s no value outside of commercial success.

  15. Chris_B Says:

    R J Lee: I was having trouble giving away CDs of my music to Japanese kids the other day. They were saying it would be better if they paid for it.

    As far as all the paper that exists in the financial industry, we are required by law to do most of that stuff. God forbid a 1 Yen error is found, that will generate a few more kilos of paper for the BOJ/FSA/SCEC.

  16. Dave Says:

    I was fairly sure that a lot of it was probably required by law (although in my experience people everywhere do all kinds of irrational stuff because they think it’s the law – and in Japan, where skepticism is as common as Marmite, it’s likely even rarer.)

    Sadly for Japan, all those paper copies have basically no value – they certainly don’t seem to have helped Japanese banks with their risk management (if you want to see a banker sneer, mention Japanese banks and risk management).

    Maybe it shows how dysfunctional Japanese government really is when even massive businesses like Mizuho aren’t able to lobby/encourage government to remove time and resource wasting legislation. Reduce is the first of the three Rs of eco-friendliness, for God’s sake!

    (Perhaps it’s that letter R that is the real problem….)

    It’s funny with the CDs… I guess they figure if it costs 1700 yen it must be good. Maybe you should raise it to LV prices and see who buys?

  17. R J Lee Says:

    Chris_B: I should have made the distinction between the type of work you do and the type I do. I figure lots of paperwork (hardcopy or no) is standard in the financial sector, no matter what country. However, I worlk in the E-learning and translation software business, and the type of documentation I was refering to was more of the “sent email to X at 2:15; began opening files for Japan Bottleworks at 2;17; answered telephone at 2:23. . .” type. We are required to do this, and I literally spend half on this kind of bullshit.

    Anyone who doesn’t work for a Japanese company would have to experience it directly to believe it (although I will concede that I’ve been told that the company I work for is a tiny bit worse than most). We actualy send emails to the person sitting next to us to ask if it’s okay to ask them a question–a question that will likely be asked via email!

    As for the CDs, Dave, I think the point Marxy, Chris B, and I are all trying to make is exactly what you said: “I guess they figure if it costs 1700 yen it must be good.” It seems they have no means of determining the value of art other than the monetary value assigned to it. Whether this is due to the lack of a critical infrastructure or some other factor(s) is a good question. I assume it’s acombination of cultural factors as well as the lack of a Pitchfork equivalent.

    RJL

  18. R J Lee Says:

    Ach! I must remember to preview posts. Above should be “I literally spend half *of my time* on this kind of bullshit.”