Feature: Japan confronts rising inequality after Abenomics
31/10/2021 10:18
(Repeats Oct 12 story with no changes to text)
By Kantaro Komiya and Leika Kihara
TOKYO, Oct 12 (Reuters) - Japan's stock market has surged
and luxury cars are selling fast in Tokyo after eight years of
economic stimulus under Abenomics, but that new wealth is
concentrated in a small slice of society rather than broadly
distributed, data show.
Addressing that divide has become a high priority for new
prime minister Fumio Kishida, who promised to tackle income
disparity made worse by the pandemic. But he has offered few
clues as to how he will do so.
"It's like everyone has become poor," said Masanori Aoki,
62, who owns a small coffee shop in a working class district of
northeast Tokyo.
"With Abenomics, the finance minister talked about wealth
trickling down. But there was no such thing, was there? Almost
nothing," said Aoki, who took a job as a part-time kindergarten
bus driver when the COVID-19 pandemic forced him to temporarily
shut down his shop.
Kimie Kobayashi, 55, who works at a childcare facility in
Tokyo, says her wages haven't risen for four years. She said
many who work in the industry are resigned to the fact that
salaries rarely increase.
"I can't say that my livelihood is getting any better," said
Kobayashi. "The government collects tax but that money isn't
used to help people who are really in need."
Abenomics - a dose of huge monetary, fiscal support and a
growth strategy that boosted stocks and corporate profits -
failed to create wealth to households via higher wages, data
show.
Japan's poverty rate is the second-highest among G7 nations
and the ninth-highest among OECD countries, according to the
organisation's survey, based on data available up to 2020.
Nominal wages rose just 1.2% from 2012 through 2020,
government data showed. Japanese households' average wealth fell
by 3.5% from 2014 to 2019 - although the top 10% wealthiest saw
an increase, according to another government survey.
urn:newsml:reuters.com:*:nL1N2QQ068
To be sure, inequality is far more pronounced in countries
such as the United States and Britain. Japan stood around the
middle of 39 countries surveyed by OECD in 2020 based on the
Gini coefficient, which gauges inequality.
The situation did improve for some in Japan. Manabu Fujisaki
recently splurged on a 7 million yen ($61,800) Mercedes-Benz
after reaping a huge sum from investing in cryptocurrencies.
"Abenomics brought us investors huge profits as (central
bank) money-pumping pushed up prices of financial securities,"
said Fujisaki, 34, a father of two who plans to build a 200
million yen house in Tokyo next year.
Department store Takashimaya says there is brisk demand for
Patek Philippe watches that cost more than 10 million yen, and
Baccarat chandeliers worth a few million yen.
Alfa Romeo sold 84 of its speciality models, with a price
tag exceeding 20 million yen, during the Golden Week holidays in
late April through early May - making Japan its top-selling
market globally.
Alfa Romeo sales in April-September more than doubled from
year-before levels. Sales of other import brands like Ferrari,
Jaguar and Maserati also increased, industry data showed.
"We're seeing a clear rise in demand for luxury goods among
the new rich," said Takahiro Koike, a manager at the department
store Isetan, referring to a newly wealthy young entrepreneurs
and other high earners.
Kishida hopes to narrow the wealth disparity by forming a
"new type of capitalism" that includes higher wages for public
health and medical workers, and tax incentives to firms that
raise pay.
But achieving what a wall of money under Abenomics failed to
do would be challenging. Already, Kishida shelved a plan to
charge higher taxes on capital gains and dividends. urn:newsml:reuters.com:*:nL1N2R7084
Shigeto Nagai, an economist at Oxford Economics, said
offering shot-term tax breaks likely will not convince firms to
raise wages, calling instead for reforms in areas such as
Japan's rigid labour system.
"First and foremost, politicians must abandon the
unrealistic and optimistic premise of Abenomics that Japan can
cure all ills just by reflating nominal growth," Nagai said.
($1 = 113.2700 yen)
(Reporting by Kantaro Komiya and Leika Kihara. Editing by Gerry
Doyle)
((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters
Messaging: leika.kihara.reuters.com@reuters.net))