Setting sun

Japan’s 20-something generation – those born during a heady ‘bubble economy’ they can’t recall – are coming of age in an era of sliding national status and eyeing retirement when, many predict, the country’s economic sun will have set.

Fracturing of the post-World War II system that propelled Japan’s economy to the number two global spot – a status now lost to China – has pushed many to seek security by trying to cling to what remains. But for others, the uncertainty itself is giving birth to a do-it-yourself mindset that could generate welcome dynamism. “If we expect the country to take care of us, we may end up not being able to make a living,” says Megumi Kawashima, 27, a  web designer. “We should be sensible enough to know we need to take care of ourselves.”

For now, these DIY youths appear to be a minority, whose voice has been drowned out by a drumbeat of reports about Japanese youth’s generally passive response to a dismal future. But experts say their ranks will grow as traditional corporate and social systems crumble further. “On the one hand, you have young people who are taking matters into their own hands in the face of companies and a government who have little to offer them in return,” said Yasuo Suwa, a professor at Hosei University’s graduate school. “But on the other hand, you have young people who are looking for an easy way out, seeking shelters that are fast disappearing,” Suwa said. “It will be slow, but I think there will be more gutsy young people going forward.”

Daunting demographics
The macro-economic and demographic trends confronting Japan’s youth are indeed daunting. Japan’s public debt has risen to about twice the size of its $5trn economy from about half of GDP in 1980, and is forecast to be nearer 250 percent by 2015. Credit rating agency Standard and Poor’s in January downgraded its rating on Japan’s sovereign debt to AA minus from AA, warning that Japan’s government debt would keep rising and citing political deadlock as a concern.

Nearly one in four Japanese are now aged 65 or over, with the figure expected to reach 40 percent by 2050. The economy has been mired in mild deflation for most of the past decade.

The ageing of Japan is forcing politicians to face up to the need to raise a five percent sales tax to finance bulging pension and healthcare costs, breaking a long-time political taboo. Social-security spending could reach more than 28.7trn yen ($351bn) in the next fiscal year, accounting for a third of the overall budget. But while many lawmakers on both sides of the aisle agree higher taxes are unavoidable, struggling Prime Minister Naoto Kan is having little success luring feisty opposition parties to the table to discuss specific reforms.

Time bomb
Twenty-something Japanese know they now face a less secure future in a system in which fewer than two workers will be supporting one retiree by 2030, from three now.

“Japan’s fiscal state is like a ticking bomb,” says Hiromi, 26, who joined the elite finance ministry after watching a banking crisis unfold in the 1990s when he was a student. “As I think about having a child in the future and wonder what his or her future will be like, I want to do something to fix the situation,” added Hiromi, who asked to be identified only by his first name so he could speak more freely.

But few 20-somethings expect the government to do much to fix  Japan’s problems or secure their future. A survey of college students conducted last year by fund manager Fidelity International showed that 65 percent were pessimistic about  Japan’s future – and an equal percentage believed they would have to rely on their own assets and savings in their old age, more than pensions.

Youth are keenly aware of China’s lengthening shadow as their giant neighbour bumps Japan out of its number two global economic ranking, though many seem little phased by Tokyo’s relative decline. China had long been leading Japan in national might except for the past 100 years or so,” says Tsunehira Furuya, 28; “China getting ahead of Japan economically is sort of a return to the historical norm, and that does not bother me.”

Japan’s relative loss of global status may be inevitable given demographics and the maturity of its economy. But a growing self-reliance and willingness to take risks could translate into a less gloomy future than many have predicted. “If you know that the best and the brightest only go to GM or Ford, all the other places that could innovate don’t,” said Brian Heywood, CEO of Taiyo Pacific Partners, which has about $2bn invested in Japanese shares. “If it is no longer the case that they only go to Toyota or Sony … you could have real dynamism in the economy,” he said. “It doesn’t happen overnight.”

For now, many young people seem to be seeking an elusive security, an attitude scoffed at by members of the DIY tribe. “Japanese in general these days are really spoiled and not ambitious, and just happy enough with what they are or what they have,” says Juri Imamura, 28, who got a graduate degree in New York before taking a job at a Japanese e-commerce firm with aggressive overseas plans. “They aren’t hungry.”

Surveys of university students by publishing and human resources firm Recruit show a steady increase since 2005 in the percentage of those wanting to spend their entire career at the first company that hires them, rising to around 80 percent as the economy faltered.

But with Japan’s famed lifetime employment system crumbling to be replaced by a labour force where one-third of workers have unstable jobs with uncertain benefits, chances today’s youth can live out their lives in a secure corporate cocoon are shrinking. “I think of a company as a place that provides me with challenges and where I can build networks and develop my skills,” Imamura said. “So if my ideas and the corporate direction don’t match, naturally I would consider leaving.”  Youth unemployment is stuck near record highs at around 10 percent.

That’s low compared to many other advanced countries, but alarming for students faced with strict hiring practices that mean they may get only one shot at a full-time job after graduating. Firms seeking more vibrant hires are turning to Chinese and other foreigners as they target profits from growing overseas markets. But Jiang Yue, who left China at 19 to study in Japan, says she still confronts institutional discrimination in a country where many choose to associate foreigners with crime and social friction.

“Both my boyfriend and I work for firms listed on the first section of the Tokyo Stock Exchange. But when realtors call apartment owners, 70 percent of the time they say no,” said the 27-year-old Jiang, who graduated from a Japanese national university and now works for an IT network firm in Tokyo. “We are working hard and receiving salaries. Why is it that we can’t rent a place?”

Experts say that with a population forecast to shrink 30 percent by 2055, Japan has to look seriously at opening up to immigrants, a sensitive subject in a country where many worry more foreigners mean more crime and less social cohesion. Lawmakers in both major parties have proposed more liberal immigration policy, but neither side wants to air the topic these days for fear of alienating voters.

Opening the doors to more immigrants would require sorting out thorny issues such as who should pay for language education and other assimilation costs, and how to guard against friction between newcomers and local residents.

Equality
The  World Economic Forum’s Global Gender Gap Index, measuring equality between men and women, ranked Japan 94 out of 134 countries. A study by Japan’s Gender Equality Bureau of the Cabinet Office found that women accounted for only 4.1 percent of department managers in 2008 – a modest increase from 2.1 percent in 1999. “Women are treated as a minority,” says a 20-something female banker who is looking for a different job. “Men’s attitudes get cold and harsh when women try to play on the same level,” added the banker, who declined to be identified for fear of repercussions at work while she seeks another job.