Subject: [cwj 74] Rich Gets Richer, Middle Class Falters
From: Corporate Watch in Japanese <>
Date: Thu, 17 Aug 2000 16:45:10 -0700
Seq: 74

JAPAN: Rich Gets Richer, Middle Class Falters

By Christine Cunanan

TOKYO, Jul 26 (IPS) - 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 40ish Ikeda still reports to his foreign asset management
company in a taxicab each day and spends at least 20,000 yen  (185
dollars) for dinner several times a week.

He and his family rent a 950,000 yen-a-month (8,800 U.S.
dollars), 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, and lived in an
apartment that was provided by his bank and is 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
subsidised prices.

Early this year, however, Murakami's position 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 become among the growing number of
have-nots -- while most of the already affluent ones have only
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

''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,'' he adds, ''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

Hiroshi Mikitani, president of Rakuten Ichiba, Japan's most
successful online shopping mall, describes recent consumer
behaviour 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 a first-hand experience of.
These days, there are even people living in the same building who
have had to leave their jobs,'' Sakamoto adds.

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 -- 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 operate 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,'' Miki says.

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.'' (END/IPS/ap-if-dv/cc/ccb/js/00)

Origin: Manila/ECONOMY-JAPAN/

       [c] 2000, InterPress Third World News Agency (IPS)
                     All rights reserved

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