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Questions raised over numbers used by Abe to demonstrate economic recovery

  • 2016-01-21 15:00:00
  • , Tokyo Shimbun
  • Translation

(Tokyo Shimbun: January 20, 2016 – p. 24-25)

 

 Prime Minister Shinzo Abe proudly noted at a New Year press conference held on Jan. 4 that the Japanese economy has finally climbed out of deflation. His remarks sparked debate at a Diet session convened afterwards, but he is confident that his economic stimulus has been working to boost the economy, saying this is backed by numbers. But at the same time, there is data that contradicts his argument.

 

 During the press conference, Abe touted the creation of over 1.1 million jobs over the past three years and the first wage increase in 17 years. But at a House of Councillors Budget Committee meeting on Jan. 18, Akira Koike (Japanese Communist Party) challenged Abe by saying that Japan has a high poverty rate. According to a Ministry of Health, Labor and Welfare survey he cited, Japan’s relative poverty rate stood at 16.1% in 2012.

 

 Abe responded to him by saying that Japan’s relative poverty is 10.1% according to a survey conducted by the Ministry of Internal Affairs and Communications in 2009. He stressed that based on this figure, Japan is a relatively rich country by global standards.

 

 The MHLW survey covers all households in 2,000 locations across the country and interviews them on their income and other items related to people’s livelihoods. On the other hand, the MIC survey asks selected households to record their financial accounts. The needy tend not to respond to questionnaires due to limited leisure time.

 

 But what matters the most is that these both items point to a rise in the poverty rate. Besides that, the number Abe presented is not convincing, as it was taken from a survey conducted seven years ago.

 

 A similar contradiction can be observed in Abe’s argument about wage increases. According to the Japan Business Federation, or Keidanren, companies’ wages increased by 1.83% shortly after Abe returned to office in 2013, by 2.28% in 2014, and by 2.52% in 2015. But the data was based on a wage survey targeting about 250 firms listed in the First Section of the Tokyo Stock Exchange and hire more than 500 people who are mostly full-time workers.

 

 By contrast, according to a monthly labor survey by the MHLW, gross real wage fell 0.9% on the year in 2012, 0.9% in 2013, and 2.8% in 2014. The data for this survey covered all businesses that have at least five employees, regardless of the type of contract. It’s obvious which data mirrors people’s actual livelihoods.

 

 Abe also takes pride in a decline in unemployment. According to a MIC survey, the unemployment rate fell to 3.3% in November 2015, from 4.3% in 2012. But the number of non-regular workers grew close to 2 million to 20.1 million in November 2015, from 18.13 million in 2012, according to provisional data. The number of regular workers, on the other hand, fell by 400,000 to 33 million during the same period. This suggests that the “quality of employment” is on the decline.

 

 The MIC data proves that many people are not feeling the benefits of the economic recovery. Average monthly spending per household remains virtually unchanged before and after the introduction of Abe’s economic stimulus, although it was slightly affected by the sales tax increase.

 

 What is becoming more serious is the poverty situation. According to the Central Council for Financial Services Information, which is administered by the Bank of Japan, households with no savings accounted for 30.9% of the total in 2015, compared to 26.0% in 2012. The number of households on welfare increased to a record 1.632 million in October 2015, from the monthly average of 1.558 million households in 2012.

 

 There is also a contradiction in the economic growth data. As an example to showcase improvements in economic indicators, the Prime Minister’s Office cites on its website that Japan’s real gross domestic product has grown by 2.4% since the launch of the Abe cabinet in 2012. But according to the Cabinet Office’s Economic and Social Research Institute, the country’s real GDP grew 5.7% from the July-September period of 2009 to the October-December period of 2012, when the Democratic Party of Japan was in power. This suggests that the DPJ performed better than the LDP in terms of economic growth, despite the fact that it suffered through the Great East Japan Earthquake.

 

 The government stresses that smaller firms will reap the benefits once large corporations regain steam and these benefits will then be distributed to employees. Is this trickle-down principle credible?

 

 Former Economic and Fiscal Policy Minister Heizo Takenaka, an advocate of this principle and chairman of employment agency Pasona, said on a TV program broadcast on Jan. 1: “There won’t be any trickle-down.” (Abridged)

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