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| Cabinet Team Reveals Package for Curing Widening Inequalities as they Grow into Major Political Issue |
With the alleged widening of income inequalities and social disparities rapidly emerging as a major political issue and the opposition parties confronting the government over its responsibility, a Cabinet team revealed a package of measures to cope with the problem. To be incorporated in the basic policy for economic and fiscal management in the middle of the year, the measures center on (1) job skills development programs for underemployed young people and households on social security, (2) providing mother-child households and those on social security with employment, and (3) raising minimum wages and productivity in smaller businesses.
The team headed by Chief Cabinet Secretary Yasuhisa Shiozaki submitted the package to the Council on Economic and Fiscal Policy chaired by Prime Minister Shinzo Abe on February 15. The package was hastily put together as Abe’s government came under attack on the issue from the opposition parties in the parliament.
The nation is still short of a complete consensus as to whether serious disparities are developing, if so, to what extent, and what are their causes; but there is a growing perception and allegation that that is the case. The trend is widely considered to be a negative legacy of the policies pursued by the government under Junichiro Koizumi, Abe’s predecessor. Abe’s pledge to prevent the disparities from worsening and to rescue those who are considered to have been left behind is high on his domestic agenda
While arguments about growing inequalities are made on many counts, prominent trends cited include a large number of underemployed young people—those lacking solid careers and skills and regular work—and a growing pool of mother-child households and those living on social security. The expression “working poor” has also entered the vocabulary of Japanese social discussions recently, denoting people in employment but paid low wages.
The number of underemployed young people, including many aged 25 to 35, is estimated at 2 million. They are largely considered victims of companies’ hiring policy during the decade-long slump of the Japanese economy. Companies stopped hiring new school leavers as regular workers and turned to various forms of temporary labor in their restructuring efforts. The problem is complicated because it is feared that these young people, if left in their current situation, will not be able to sustain themselves or their families adequately, economically or vocationally, as they get older. Meanwhile, mother-child households, many of them without a proper job and decent income, are estimated to total 1.3 million．Another underlying problem is the poor business situation of a large number of small businesses, many as subcontractors of big companies or in low-efficiency service sectors. Wages paid by them are low, often lower than the social security benefits. The Organization of Economic Cooperation and Development (OECD) in its recent report on Japan recognized the widening of disparities, attributing them to the bipolarization of the labor market.
The Cabinet team’s policy package is intended to address these problems. For training young workers lacking job skills, it proposed the “job card” system, as a certificate of completion of training programs at private corporations and public agencies, enabling its holders to seek a job at any company they like to work in. Also proposed was a five-year program to raise the employed percentage of mother-child households and those on social security to 60% from the present 48%. With regard to shoring up small businesses, a round-table conference of representatives of government, business and labor will work out a consensus for raising minimum wages over the long run; proper conditions of business contracted out by big companies; promotion of a productive improvement project by better use of information technology and other means.
Government Urged to Get More Serious
Media responses to the proposed measures were mixed, ranging from harsh criticism to lukewarm acceptance. The Mainichi Shimbun asserted that the package hardly deserved to be called a thought-out strategy. The newspaper’s February 18 editorial said, “We cannot but feel doubtful about the practicability of the proposed measures to build workers’ capacity and employment.” Although the “job card” system was not bad, it argued, “how many firms will be willing to cooperate with the system? It will only meet the need of a handful of an estimated 2 million underemployed young people and 1.3 million mother-child households. There is no guarantee that it will lead to an increase in regular employment.” As for smaller firms, it argued that “it would be difficult to achieve improvement if their parent companies, especially big businesses, are left free to press for severe cost reduction by subcontractors to strengthen competitiveness.”
The Asahi Shimbun focused on the division between regular workers and non-regular workers on the labor market as an issue that should be at the top of the political agenda. Its February 18 editorial argued that the “discrimination between regular and non-regular workers must be solved primarily with policies that address wages, contract periods and other labor conditions.” “We must demand changes from CEOs who reap huge profits at the sacrifice of low-paid non-regular workers,” it added.
The Yomiuri Shimbun called for harder work on the part of the government to make the proposed measures truly effective. Its February 19 editorial made the criticism that “the job card system lacked concrete details as to the number of people and areas of industry to be covered.” “Unless the framework of public assistance for companies that will cooperate with the system is decided, response won’t be forthcoming from industry,” it argued. It also questioned the practicability of the round-table conference for raising minimum wages at smaller businesses without the “broad understanding of the management of such firms.”
The Sankei Shimbun was equally skeptical about the package. “The job card is meaningless unless it is recognized and accepted by companies.” “While numerical targets and other details are to be fleshed out and incorporated in the mid-term economic and fiscal program in summer, the effectiveness of the program cannot be seen. What is important is to fully re-examine employment measures already being taken for young people and work out effective policies,” the newspaper asserted in its February 18 editorial. “A systematic policy with regard to working should be sought” instead of piecemeal, incoherent proposals, it added.
The Nikkei was about the only major newspaper which gave a positive evaluation to the proposed program. It said in its February 17 editorial: “In order to prevent income and other disparities from becoming fixed, . . . increasingly important policies are to eliminate, through deregulation, elements that deter economic growth and to elevate the income levels of working people through skills development. The proposal is largely in line with this idea and praiseworthy.” With regard to the job card system, the newspaper referred to its British predecessor and said the cooperation of industry was indispensable, calling on industrial leaders such as Fujio Mitarai and Uichiro Niwa, who sit on the Council on Economic and Fiscal Policies, to exercise leadership. The newspaper also stressed the importance of raising minimum wages and productivity in smaller firms, especially those in the non-manufacturing field.
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