Japan Govt’s Poverty Data Signals Policy Shift

It’s hard to imagine that there would be much hand-wringing in Japan over poverty figures. After all, this is the market where many of the world’s top luxury brands were making a killing before the Great Recession hit. Most Japanese consider themselves to be middle class—more than 80%, if you believe the Cabinet Office’s annual lifestyle survey, released in August. In a country where corporate chieftains’ salaries pale in comparison to U.S. CEOs, the relatively narrow gap between the haves and have-nots had long been a source of pride.

So why is the media making such a big deal of the Health, Labor and Welfare Ministry’s release of national poverty figures today?

One reason: It shows that Prime Minister Yukio Hatoyama is serious about his pledge to put consumers before big businesses. “The government is making the plight of consumers a top priority,” Hisa Anan, secretary-general of Consumers Japan, a national network of non-profit groups, told me. “We hope they continue to follow through.”

No Japanese prime minister had ever authorized a poverty survey before. In the past, Japan had always deferred to OECD statistics. It’s not clear why: Japan could simply have teased out the figures from its National Livelihood Survey.

There was nothing shocking about the ministry’s figures. They showed that Japan’s relative poverty rate edged up from 14.6% in 1998 to 15.7% in 2007. That number is the percentage of the population that lives on less than of the country’s median annual income of just over $25,000—or about $12,500. (Child poverty had increased went up, too, from 13.4% to 14.2%.)

But, apparently, publishing poverty data would have meant that Japan had a problem.

Earlier this month, Health, Labor and Welfare Minister Akira Nagatsuma focused national attention on poverty when he promised to survey the country’s so-called waakingu poa (or, working poor)–people who scratch by on every paycheck working part-time or minimum-wage jobs. It’s hard to fix a problem that you won’t acknowledge. The DPJ-led government was effectively admitting it had a problem.

The OECD had already ranked Japan’s poverty level fourth highest among wealthy nations. But there was one point of disagreement: In its October 2008 report (titled “Growing Unequal? Income Distribution and Poverty in OECD Countries”), the OECD found that while household incomes in Japan had declined over the past decade, income inequality and poverty were less of a problem than they were five years ago.

In recent years, ordinary Japanese have had plenty to worry about. Unemployment has risen to near record levels. The country’s so-called lost decade of no growth had forced many people to seek short-term contract work or low-paying part-time and temp jobs. And companies blindsided by the global financial crisis and economic downturn have been laying off workers by the tens of thousands. It didn’t help that the government was seen as mismanaging the national pension and health care programs, which are running out of money.

Grass-roots consumer groups had pressed the government for years to do something about what they saw as a widening gap between rich and poor–or kakusa shakai, in Japanese. But bureaucrats and politicians had the final say about the national agenda. They rarely made ordinary Japanese part of the policy debate. Hatoyama’s administration has been moving quickly to change that.