Japan

LIVING STANDARDS

With more than 5 million units in use, vending machines have become a ubiquitous feature of Japanese daily life.
Courtesy Kenji Nachi and Hitachi

In general, Japanese consumers have benefited from the nation's economic growth, while in turn they have stimulated the economy through demand for sophisticated products, loyalty to domestically produced goods, and saving and pooling investment funds. But personal disposable income has not risen as fast as the economy as a whole in many years--at 1 percentage point less than average GNP growth in the late 1980s. Despite the hard work and sacrifice that have made Japan one of the wealthiest nations in the world, some Japanese feel they are "a rich nation, but a poor people." Such a negative view of the economy is prompted by the fact that the average consumer have to pay dearly for goods and services that are much cheaper elsewhere.

Real household expenditures did rise during Japan's economic growth. Living standards improved sharply in the 1970s and 1980s. The share of total family living expenses devoted to food dropped from 35 percent in 1970 to 27 percent in 1986, while net household savings, which averaged slightly over 20 percent in the mid-1970s, averaged between 15 and 20 percent in the 1980s. Japanese households thus had greater disposable income to pay for improved housing and other consumer items. The increase in disposable income partly explained the economic boom of the 1980s, which was pushed by explosive domestic demand.

Japanese income distribution in the 1980s, both before and after taxes, was among the most equitable in the world. An important factor in income distribution is that the lower income group is better off than in most industrialized countries.

Japanese homes, although they are relatively new, are much smaller and often have fewer amenities than those in other industrialized nations. Even though the percentage of residences with flush toilets jumped from 31.4 percent in 1973 to 65.8 percent in 1988, this figure was still far lower than in other industrialized states. In some primarily rural areas of Japan, it was still under 30 percent. Even 9.7 percent of homes built between 1986 and 1988 did not have flush toilets. People in other industrialized countries take central heating and either a shower or bath for granted, but many Japanese homes are lacking in all three. However, by 1988 only 9 percent of Japanese residences had no bathtub, a figure that had improved from nearly 27 percent in 1973. The alternative for many Japanese remains public baths, although these are gradually disappearing. Additionally, 81 percent of Japanese households use kerosene heaters as the main source of heat.

Japanese housing is very expensive relative to annual income, but the high cost is somewhat offset by low interest rates and probable future income gains, making Japanese housing more affordable than it might appear. There are also many urban apartments found near public transportation that rented for as little as US$600 to US$800 a month in 1990.

The Westernization of many areas of Japanese life includes consuming a greater diversity of foods. After World War II, Japanese dietary patterns changed radically and came to resemble those of the West. While older Japanese still prefer a breakfast with traditional dishes--boiled rice, miso soup, and pickled vegetables--younger Japanese have toast and coffee. The Japanese diet improved along with other living standards. Average intake per day was 2,084 calories and 77.9 grams of protein in the late 1980s. Of total protein intake, 26.5 percent came from cereals (including 18.4 percent from rice), 9.6 percent from pulses, 23.1 percent from fish, 14.8 percent from livestock products, 11 percent from eggs and milk, and 15 percent from other sources. Before World War II, the average annual consumption of rice was 140 kilograms per capita, but it fell to 72 kilograms in 1987. This development further exacerbated the problem of rice oversupply, leading to a huge rice stock and creating great deficits in the government's foodstuff control account. The government inaugurated several policies to switch to nonrice crops, but they met with limited success and rice remained in oversupply.

A negative aspect of Japan's economic growth is industrial pollution. Until the mid-1970s, both public and private sectors pursued economic growth with such single-mindedness that prosperity was accompanied by severe degradation of both the environment and the quality of life (see Pollution , ch. 2).

Typically, Japanese consumers have been savers as well as buyers, partly because of habit, but by 1980 the consumer credit industry began to flourish. Younger families are particularly prone to take on debt. Housing is the largest single item for which consumers contracted loans. In 1989 families annually borrowed an estimated US$17,000 or about 23 percent of their average savings. Those who wished to buy houses and real estate needed an average US$242,600, of which they borrowed about US$129,000. But many younger families in the 1980s were giving up the idea of ever buying a house. This change led many young Japanese to spend part of their savings on trips abroad, expensive consumer items, and other luxuries. As one young worker put it, "If I can never buy a house, at least I can use my money to enjoy life now." As credit card and finance agency facilities expanded, the use of credit to procure other consumer durables was spreading. By 1989 the number of credit cards issued in Japan reached virtual parity with the population.

Japanese families still feel that saving for retirement is critical because of the relative inadequacy of official social security and private pension plans. The average family in 1989 had US$76,500 in savings, a figure far short of what was needed to cover the living expenses for retired individuals, although official pensions and retirement allowances did help cover the financial burdens of senior citizens. The annual living expenses for retired individuals in 1989 were estimated at US$22,800, half of which was received from government pensions and the rest from savings and retirement allowances. Senior citizens in their seventies had the largest savings, including deposits, insurance, and negotiable securities worth an estimated US$113,000 per person. In 1989 individuals in their twenties had savings amounting to US$23,800, while salaried workers in their thirties had US$66,000 in savings.

The Japanese consumer benefits most from the availability of compact, sophisticated consumer products that are popular exports. Television sets, watches, clothing, automobiles, household appliances, and personal computers are quality items that industry provided in quantity. In the late 1980s, virtually every Japanese family had one or more television sets, a washing machine, a refrigerator, small space heaters, and cameras. Sixty percent of Japanese homes in 1989 had air conditioning of some kind. Other popular items in the 1980s included electric ranges, video cassette recorders, video cameras, compact disc players, and personal computers. Most families had an automobile.

It is difficult to make cross-cultural comparisons, but one Japanese social scientist ranked Japan among a group of ten other industrialized nations according to a variety of variables. In this comparison, for which there are data from the mid-1970s to the late 1980s, Japan was better than average in terms of overall income distribution, per capita disposable income, traffic safety and crime, life expectancy and infant mortality, proportion of owner- occupied homes, work stoppages and labor unrest, worker absenteeism, and air pollution. Japan was below average for wage differentials by gender and firm size, labor's share of total manufacturing income, social security and unemployment benefits, weekly workdays and daily work hours, overall price of land and housing, river pollution, sewage facilities, and recreational park areas in urban centers. Some of these variables, especially pollution and increased leisure time, improved in the 1980s, and, in general, living standards in Japan were comparable to those of the world's wealthiest economies.

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There are numerous excellent works on the Japanese economy from a variety of perspectives. Studies charting the nation's modernization from the prewar era include William W. Lockwood's The State and Economic Enterprise in Japan, G.C. Allen's Japan's Economic Policy, and Allen's A Short Economic History of Modern Japan. The best source for prewar data is Patterns of Japanese Economic Development, edited by Ohkawa Kazushi and Miyohei Shinohara. Among general works on the postwar economy are Asia's New Giant, edited by Hugh Patrick and Henry Rosovsky, and The Japanese Economic System, by Haitani Kanji. Both works are out of date, but give an accurate appraisal of the Japanese economy through the 1970s. More up-to-date works include The Political Economy of Japan, edited by Kozo Yamamura and Yasukichi Yasuba, Frank Gibney's Miracle by Design, Daniel A. Metraux's The Japanese Economy and the American Businessman, Edward J. Lincoln's Japan: Facing Economic Maturity, and Kunio Yoshihara's Japanese Economic Development. Rodney Clark's The Japanese Company is an excellent summary of research on the Japanese corporate system and labor-management relations. Some of the better books on Japanese management and labor include Michael A. Cusumano's The Japanese Automobile Industry, W. Mark Fruin's Kikkoman: Company, Clan, and Community, R.P. Dore's classic, British Factory, Japanese Factory, Andrew Gordon's The Evolution of Labor Relations in Japan, and Taishiro Shirai's Contemporary Industrial Relations in Japan. An excellent study of government-business relations is found in Industrial Policy of Japan, edited by Ryutaro Komiya, Masahiro Okuno, and Kotaro Suzumura. An equally comprehensive work is Chalmers Johnson's MITI and the Japanese Miracle. Excellent coverage of Japan's financial and corporate worlds is found in Robert J. Ballon and Iwao Tomita's The Financial Behavior of Japanese Corporations, Aron Viner's Inside Japan's Financial Markets, and James C. Abeggleu and George Stalk, Jr.'s Kaisha: The Japanese Corporation. The Japan Statistical Yearbook produced by Japan's Management and Coordination Agency provides up-to-date statistics. For up-to-date and sophisticated analyses, see the publications of the Washington-based Japan Economic Institute of America (JEI). Regular JEI publications include the monthly Japan Economic Survey and the weekly JEI Report. For a Japanese perspective on the economy, see articles in the English-language Japan Economic Journal, Journal of Japanese Trade & Industry, Mitsubishi Bank Review, Japan Times Weekly, Japan Echo, and The Japan Economic Review [all published in Tokyo]. There are frequent articles on the Japanese economy in Far Eastern Economic Review [Hong Kong] and Asian Survey. (For further information and complete citations, see Bibliography).

Data as of January 1994

Japan - TABLE OF CONTENTS