After five years of the most aggressive cash injection in Japanese history – over 400 trillion yen of funds aimed to beat deflation and move the economy into high growth mode – some areas of economy have not seen clear benefits. Japan is still seeing slow growth while the BoJ inflation target of 2 percent has not been achieved. Taxi drivers, salary workers as they are called, and small family owned businesses are still facing challenges in the this lackluster economy. Some blame the Abe government for failing to restructure the labor market, others say that the aging and shrinking population are the reason that the “deflationary mindset” will not fade away. People are aging and with fewer numbers, they do not spend money. And note that with this massive injection of cash, the GDP rate is only 1.2 percent, only slightly above the forecast rate by many economists.
Still, the number of jobs created in the past 5 years is keeping the unemployment rate below the 2.5% so Japanese youth are leaving university and finding work they want. Technology is damaging some sectors but others such as construction and healthcare are booming – the Japanese government is adjusting labor laws to bring in workers from overseas to care for the aging population. Note that there have been over 30 million visitors to Japan in 2018 and as a result the tourism business, hotels as well, is having record cash flows.
Still, the superrich get richer under Abenomics as the number of super rich have doubled since 2011. The number of households with over 500 million yen in assets spiked to 84,000 in recent years. This has fueled criticism for PM Abe as the lower ranks of the labor market have been left behind.
Japan is now experiencing challenges in its labor market, and in the coming years, there will be changes. Some older Japanese are working past 70 years old as they feel that the government will run out of funds to pay pensions each month. More on the Japanese labor market and economy in coming articles.