Ja­pan mil­len­ni­als the gloomi­est

Sur­vey of 18 na­tions de­tects pes­simism on econ­omy, fu­ture

Baltimore Sun - - BUSINESS - By Henry Hoenig and Keiko Ujikane

Youth­ful op­ti­mism can be hard to find in Ja­pan, where mil­len­ni­als rank as the gloomi­est of those in the world’s big­gest economies.

While a ma­jor­ity of young adults in its trad­ing part­ners see bright fu­tures and suc­cess­ful ca­reers ahead, fewer than 40 per­cent of Japanese do, mak­ing them the most pes­simistic in 18 coun­tries sur­veyed by Man­pow­erGroup. They’re even more down­beat than young Greeks, who have suf­fered Great De­pres­sion­like con­di­tions and po­lit­i­cal up­heaval in re­cent years.

So much for ef­forts to erad­i­cate Ja­pan’s “de­fla­tion­ary mind­set.” As Prime Min­is­ter Shinzo Abe tries to en­gi­neer an eco­nomic re­vival, young Japanese are far from bullish. It’s weigh­ing on the econ­omy al­ready and poses chal­lenges for the fu­ture.

Japanese mil­len­ni­als face a fu­ture of pay­ing to care for one of the world’s most rapidly grow­ing el­derly pop­u­la­tions, with more than a third of them likely headed for a se­ries of low­er­pay­ing dead-end jobs on the less de­sir­able side of the na­tion’s dual la­bor mar­ket. Then there’s a pub­lic debt bur­den that ranks among the world’s big­gest.

Skep­ti­cal that the na­tion’s pen­sion sys­tem will be around to take care of them, 20-some­things are al­ready con­cerned about life af­ter re­tire­ment and scrimp­ing to save for the fu­ture. Low and stag­nant pay is forc­ing many to de­lay or even forgo mar­riage, home-buy­ing and chil­drea­r­ing. About 37 per­cent ex­pect to work un­til they die, the Man­pow­erGroup sur­vey found. Young adults in Ja­pan re­port­edly feel the weight of pub­lic debt and are al­ready con­cerned about life af­ter re­tire­ment.

Ko­hei Ito, 24, said he has no faith that the gov­ern­ment will fix prob­lems such as the pen­sion sys­tem, which he wor­ries is un­sus­tain­able. A col­lege grad­u­ate, Ito works in a fitness cen­ter, and is think­ing about mov­ing over­seas to teach sports to chil­dren in de­vel­op­ing coun­tries. “I don’t think Japanese pol­i­tics is go­ing to get bet­ter, and I don’t think the econ­omy will get bet­ter ei­ther,” he said.

Pre­fer­ring se­cu­rity, young Japanese show lit­tle of the “an­i­mal spir­its” needed to help re­al­ize Abe’s vi­sion of a “great en­tre­pre­neur­ial na­tion.” Younger work­ers are the least in­clined to strike out on their own in more than a decade, ac­cord­ing to a sur­vey of re­cently em­ployed peo­ple by the Ja­pan Pro­duc­tiv­ity Cen­ter.

“Mil­len­ni­als, if they can, they want to join a ma­jor com­pany,” said Daisuke Oya, 23, who works in a card­board fac­tory as a ma­chine op­er­a­tor. “If you can join a big com­pany when you’re young, it’s more sta­ble.”

That kind of think­ing is a “very big con­cern,” said Ran­dall Jones, head of the Ja­pan-Korea desk at the Or­ga­ni­za­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment. He said young Japanese have a “fix­a­tion on work­ing for large com­pa­nies or the gov­ern­ment.”

Chang­ing such at­ti­tudes is a key chal­lenge for Ja­pan, which ranks low in en­trepreneur­ship glob­ally, and do­ing so is nec­es­sary to drive the in­no­va­tion and pro­duc­tiv­ity growth needed to sus­tain ris­ing liv­ing stan­dards as the pop­u­la­tion shrinks, the OECD says. The coun­try has abun­dant patents and piles of idle cor­po­rate cash, but it lacks enough en­trepreneurs to make full use of them, Jones said.

Many young Japanese have cast off the val­ues that drove their par­ents and grand­par­ents to toil away much of their lives in fac­to­ries and of­fices dur­ing the na­tion’s post­war boom years. They say they prize ex­pe­ri­ences over pos­ses­sions and at work seek self- f ul­fill­ment and achieve­ment over ca­reer ad­vance­ment. Many sur­veys find them de­scrib­ing them­selves as happy — at least for now.

Yet for many peo­ple like Oya, the dream re­mains ba­si­cally the same: a sta­ble job that pays enough money to get mar­ried and have chil­dren. Af­ter grad­u­at­ing from a vo­ca­tional high school, Oya landed a po­si­tion at a met­al­work­ing plant, but the hours and pay fluc­tu­ated, so he left re­cently to work at the card­board fac­tory.

“My girl­friend told me, if this is all I make, we can’t get mar­ried, we can’t have chil­dren,” he said. “Hon­estly, it was pretty shock­ing to think about.”

Many other young cou­ples have had that con­ver­sa­tion. The per­cent­age of men and women in their 20s who want to get mar­ried has fallen sharply over the past three years, to 39 per­cent of men and 59 per­cent of women, with many cit­ing low pay as the rea­son, ac- cord­ing to a sur­vey this year by the Meiji Ya­suda In­sti­tute of Life and Well­ness.

The source of much of their strug­gles is Ja­pan’s dual la­bor mar­ket, which keeps wages down while rais­ing job in­se­cu­rity. It also lim­its op­por­tu­ni­ties for em­ploy­ees to de­velop skills, which in the long term will hurt the econ­omy, ac­cord­ing to Hiroaki Miyamoto, a Uni­ver­sity of Tokyo as­so­ciate pro­fes­sor.

But pub­lic debt may prove the big­gest eco­nomic bur­den for Ja­pan’s mil­len­ni­als.

The share of the debt for each Japanese child un­der 15 stood at $794,000 each as of 2011 — more than 21⁄ times that of chil­dren in Italy and Greece, the two next-worst cases, ac­cord­ing to Ber­tels­mann Stiftung, a Ger­man non­profit foun­da­tion. Be­cause of that, and a dis­pro­por­tion­ately large share of so­cial spend­ing go­ing to the el­derly, Ja­pan ranks as the world’s sec­ond­most “in­ter­gen­er­a­tionally un­just” coun­try, it said.

Young Japanese are al­ready re­spond­ing in ways that drag on the econ­omy. At a time when do­mes­tic con­sump­tion has stalled, their sav­ings rate is on the rise, with ages 25-34 sav­ing a larger share of their earn­ings than any other age group in 2015, UBS said in a re­cent re­port, cit­ing gov­ern­ment data.

In fact, most of what lit­tle growth in con­sump­tion Ja­pan has seen over the past decade has been driven by se­niors, off­set­ting a de­cline among younger peo­ple, UBS said.

The OECD’s Jones notes that just to sta­bi­lize the debt at cur­rent levels would re­quire dif­fi­cult choices, likely in­clud­ing rais­ing the sales tax from the cur­rent 8 per­cent, which sits well be­low the OECD av­er­age of about 20 per­cent, he said. The bulk of that will fall on the younger peo­ple who will be around longer.

TOMOHIRO OHSUMI/BLOOMBERG

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