Yen for Living

Women's clinic in Chiba Prefecture

Contrary to what most people believe, abortion in Japan is not legal. The reason abortions are performed freely in Japan — 210,000 were reported in 2010, but the number is probably higher — is that shortly after the war the daitaizai (illegal abortion) law was exchanged for the Eugenics Law to address the population boom. This law allowed for a pregnant woman to abort her child only if the pregnancy threatens her life or health, or if the woman is financially unable to raise the child. It did not make abortion a right available to any woman who wanted one.

It is thus assumed, for legal purposes, that the vast majority of women who undergo abortions do so for economic reasons. However, since there is no real provision for having women state their reasons when seeking abortions, and no woman in Japan has been prosecuted for aborting a fetus since World War II, abortion is considered effectively legal. It is also quite expensive. Unless the procedure is being carried out specifically for health reasons, national insurance will not cover it. This situation has lead to a paradox: Most women in Japan who seek abortions ostensibly do so because of financial hardship, but are nevertheless forced to pay a great deal of money to have those abortions performed.

According to our own Internet survey of gynecology services and comments on various blogs and websites, the cost of an abortion up to the 12th week of pregnancy ranges from ¥80,000 to ¥150,000, which is only the cost of the procedure and does not include consultation fees and medication. However, after the 12th week of pregnancy, the cost increases considerably. Abortions performed between the 12th and 22nd week of pregnancy are between ¥300,000 and ¥500,000. Also, if the patient suffers from a chronic condition that could complicate the procedure, such as asthma, she is required to undergo the procedure at a general clinic, which tends to be more expensive than a women’s clinic or a gynecology office.

Of course, if a physician concludes that the pregnancy threatens the woman’s life or health, insurance can be used for the abortion; and if the cost of the operation goes above a certain level, she can receive a refund for any money she pays out of pocket. Even if the cost does not rise above that designated level, if she files an income tax return she can deduct the cost of her abortion on her return, including money she paid for sanitary napkins and even the taxi fare to the clinic. But this is only if the procedure was done for health reasons. Other costs that apply but usually aren’t mentioned have to do with the aborted fetus. If an abortion (or miscarriage) takes place after the eleventh week of pregnancy, the attending physician has to fill out a death report which the mother then files at the local city office. After that she has to pay for cremation. There are also optional costs for mizuko kuyo, or memorial services for aborted babies, which start at about ¥40,000.

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Checking out the merchandise

Ever since Japan emerged as a manufacturing giant it has concentrated a great deal of sales efforts on exports, but in the past decade or so, as the country’s population has begun to contract, foreign markets have become even more important to sustain corporate growth. And nowhere is this dynamic felt more acutely than in the disposable diaper business. Japanese are having fewer babies. In 2011 the domestic market for disposable baby diapers was about ¥140 billion, but according to one major manufacturer, Unicharm, that market is shrinking at a rate of about 2 percent a year. However, in many other Asian countries,  population is increasing along with average living standards.

Whether it foresaw these changes or not, Unicharm entered the foreign market early and started selling diapers in Taiwan in 1984. It now has a presence in 80 countries and territories, in the form of factories or sales channels. This summer the company plans to open a plant in Egypt, its first on the African continent. Unicharm’s strategy is to adjust quality and price for specific local markets. For instance, it offers three price grades of diapers in Thailand and Malaysia, each price targeted at a specific income group; while in Indonesia it sells diapers individually rather than in packs since that is the way most retail sales work in the country.

Japanese disposable diapers are generally considered to be of high quality, and many manufacturers, such as Kao, which makes Merries, the best-selling diaper in Japan, simply target parents in foreign countries who can afford to pay a little more for diapers. Merries is quite popular among middle class parents in China, where they are 20 to 30 percent more expensive than “regular” disposable diapers. Meanwhile, Daio Paper, which is also considered high quality and sells 40 percent of its disposable diapers outside of Japan, seems to be particularly popular among the well-to-do in Shanghai.

But the real news in the diaper business is at the other demographic end. In 2011, for the first time, sales of adult diapers in Japan exceeded sales of baby diapers. According to Yano Research, sales of adult diapers in 2011 increased by more than 100 percent from 2010, with revenues topping ¥160 billion. Unicharm alone recorded sales of ¥60 billion. Growth in the adult diaper market is propelled by more than just the aging of the population. Purchases of adult diapers can be subsidized in part by the Long-term Nursing Care Insurance system (kaigo hoken), and while babies usually need diapers for three years, four at most, older people could conceivably need to use them longer. And as advertising becomes more widespread the hazukashii (embarrassment) factor will continue to abate.

Media crews across the street from Rikuentai offices in Chiba Prefecture

Shortly after he was elected mayor of Osaka earlier this year, Toru Hashimoto announced that one of his first acts in tackling the city’s deficit would be to cut municipal bus driver salaries by as much as 40 percent for a savings of ¥200 billion a year. The city employs 700 drivers whose average age is 50 and average annual pay is ¥7.39 million. Hashimoto wants to bring their salaries down to about the same level that bus drivers of private companies make in the region. According to the land ministry, the average pay of bus drivers in Osaka, whether they work for a private company or a public entity, is ¥4.6 million a year. Since Osaka municipal drivers belong to a union, it’s assumed Hashimoto has his work cut out for him, but likely he’ll make the change he wants gradually, by cutting pay grade increases for newer drivers.

Bus drivers are in the news now because of the accident on the Kanetsu Expressway in which seven passengers died during an overnight charter bus trip from Kanazawa to Tokyo. The driver fell asleep at the wheel and the bus crashed into an overpass wall. Though the driver was arrested for negligence, the accident has brought attention to the stress that long-distance bus drivers contend with every day. Driving a bus, especially in cramped Japan, is a risky occupation since the driver is responsible for passengers’ lives, but salaries don’t necessarily reflect that risk. Municipal bus drivers tend to make the most, but they almost never drive long monotonous distances that can cause drowsiness.

According to a blog that solicits readers about their salaries, municipal drivers and highway route drivers who work for major transportation companies make the most money, around ¥7 million, followed by route bus drivers who work for private companies. They make between ¥5.5 million and ¥6 million, or less depending on the region. The lowest pay is earned by charter tour bus drivers, like the one who had the accident on the Kanetsu. One 50-year-old who posted on the blog said he made ¥4.8 million a year, while a 29-year-old charter driver said he makes only ¥2.4 million.

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We’re almost a month into the new fiscal year so it’s high time to review any changes in the cost of living for the average person in Japan. Not counting consumer spending, for the most part the change is negligible. Premiums for national health insurance have gone up for those who belong to the kyokai kenpo system, meaning mainly employees of small and medium-sized companies, from 9.5 percent to 10 percent of salary amount, which works out, on average, to an extra ¥780 a month. The long-term nursing care insurance payments (kaigo hokenryo) for persons aged 40 to 64, whether employed or not, have increased from ¥4,516 to ¥4,697 a month. Reflecting deflationary trends, payouts of basic pension have been reduced by 0.3 percent, but premiums have gone down from ¥15,020 a month to ¥14,980. Unemployment insurance has also been cut from 1.2 percent to 1 percent of salary amount. Utilities are going up. Electric bills will increase from ¥17 to ¥42 a month for an average family, and gas bills will increase from ¥8 to ¥11 a month.

Surprise! Local tax bill for Arakawa Ward, Tokyo, first quarter fiscal 2011

These changes won’t have a major effect on the average household. But one change that may is the shift in tax rules related to the child allowance (jido teate), which was one of the central proposals of the Democratic Party of Japan’s manifesto when it became the ruling party. The DPJ won on the assumption it would pay out ¥26,000 a month per child. By the time the opposition parties got through tearing the proposal apart, the amount had been cut in half, but that payout only lasted a year.

Starting in April, the allowance, which used to be called kodomo teate — the change to jido was supposedly implemented to placate the Komeito Party, who originally came up with the idea years ago under that name — will pay ¥15,000 a month for a child under 3 years old; ¥10,000 a month for the first two children in a family from the age of 3 until they graduate from elementary school; ¥15,000 a month for each child after the second one in the same age group; and ¥10,000 a month for each child in junior high school.

However, in order to get the opposition to accept even this reduced child allowance system, the DPJ had to abolish the dependent child tax deduction starting with tax returns for fiscal 2011, which were just filed this spring. In effect, it means that parents can no longer claim children up to high school, meaning less than 16 years of age, for a tax deduction since they are eligible for the child allowance. High school age children are not eligible for the child allowance so they can still be used as a tax deduction, but the amount of the deduction has been reduced from ¥630,000 to ¥380,000, because the government has now made high school free for everyone, including students who attend private institutions.

Where this change will be felt most immediately is on the local tax (juminzei) bills everyone receives in June. Local tax is calculated based on the national tax returns filed by the middle of March, so because these dependent child deductions no longer apply, individual households’ taxable incomes will increase, meaning the households will see an attendant increase in their local tax bills. Of course, it also means higher taxes on the national level, too, but since these changes weren’t implemented until last fall and salaried workers’ taxes are calculated by the bookkeeping departments of the companies/organizations they work for, they probably didn’t notice the slight monthly increase in their pay statements. They will certainly notice it on the local tax bills, since it shows the amount for the entire year. (It also affects the premiums paid for national health insurance since premiums are based on the previous year’s taxable income.)

So what does this mean in yen terms for the average family? According to the Ministry of Health, Labor and Welfare, taking into consideration both the child allowance payments and the boost in tax liabilities caused by the loss of the child deduction, an average family consisting of one breadwinner earning ¥3 million a year, one full-time homemaker and one child will end up with ¥667 more per month than they had before the DPJ came to power. The same family making ¥5 million a year will end up with ¥375 less per month. If income is between ¥8 and ¥10 million, the average loss is ¥4,083, and if it’s over ¥15 million it’s an average deficit of ¥8,200 a month. To put it another way, according to Sankei Shimbun, the average family making more than ¥4.88 million a year will, on balance, pay more than they did before the DPJ was elected. It’s as good an illustration as any of where politics gets you.

Divorce in Japan can be ridiculously easy. If the two parties are in agreement about breaking up, all they have to do is go down to their local government office, fill out a rikon todoke (divorce notification) and give it to the Man. No fuss, no muss, no grounds. In fact, both parties don’t even have to be present, as long as their seals are affixed to the document. About 90 percent of all divorces are carried out in this “mutual consent” (kyogi-teki) way.

Page 2 of divorce notification with "minor child" box in lower right corner

Starting this spring, however, the notification form has a new box in the lower, right-hand corner. The box concerns “minor offspring.” If the couple has a child under the age of 20, they are required to check this box, though if they don’t nothing will happen. The divorce will still go through. According to a recent article in the Tokyo Shimbun, when someone goes into his or her city hall and asks for the divorce notification form, the clerk is supposed to explain the purpose of this new box and encourage the person to check the appropriate statements if he or she has children, but in principle such disclosure is voluntary.

The purpose of the new box is to promote greater awareness of children’s position in a divorce with regard to visitation and child support. The Ministry of Health, Labor and Welfare has said that children’s welfare should be prioritized by parents who are divorcing, and the box is a nudge to get them to at least think about visitation and child support before they finalize their divorce.

As it stands, both concepts are still very weak in Japan. In a 2006 survey conducted by the ministry, only 34 percent of single parents who went through mutually agreed upon divorces (meaning no lawyers, mediation or courts) said they had made verbal agreements with their ex-spouses to the effect that the latter would pay something in the way of child support. However, in reality, less than 19 percent actually paid, and 60 percent of all divorced custodial parents have never received any assistance from their ex-partners at all.

In the United States it’s the opposite: 60 percent of custodial parents receive child support from the non-custodial parent. In 2005, the average amount of this support was $6,200 a year, regardless of how many children are being supported. In Japan, the average child support payment among non-custodial parents who actually do pay is ¥42,000 a month, which works out to be about the same. According to research carried out by the Japan Institute for Labor Policy and Training, in the U.S. when custodial parents don’t demand child support it’s usually because they don’t need it; while in Japan a custodial parent usually doesn’t demand it because she doesn’t think her ex-partner can pay. In such situations, they don’t even think about alimony.

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Can't get there from here: empty storefronts at Big Hop Garden Mall

This weekend marks the grand opening of Mitsui Outlet Park Kisarazu, a so-called outlet mall in the coastal city of Kisarazu in Chiba Prefecture. So far the mall has 171 stores, including 21 retailers that have never before participated in any Japanese outlet mall. Mitsui Fudosan, which developed and manages the facility, says it hopes to eventually have 250 stores in the mall. Its sales target for the first year is between ¥32 billion and ¥34 billion, which would make it the biggest money-maker of the 12 outlet malls the company operates.

Mitsui isn’t the only developer staking its future on the success of American-style suburban shopping complexes. In Japan there are now 39 outlet malls, which are characterized by stores that are directly owned and run by manufacturers. In principle, that means cutting out one or more middlemen and offering greater savings on name-brand goods. According to the most recent statistics we could find there are more than 1,600 “shopping malls” in Japan, though most of these are urban complexes that vary significantly in style and form from the classic American-style shopping mall.

Nevertheless, over the past decade or so, the number of shopping malls has increased in suburban areas as more traditional shopping arcades (shotengai) have declined in number or even vanished. The main features of these suburban shopping malls is one or two large “anchor” retailers, usually a department store and/or major supermarket chain, and, most significant for Japan, the fact that they aren’t located near train stations, where land is more expensive. That means they target motorists and feature the sort of enormous parking lots that are ubiquitous in the United States but which, until recently, were unheard of in Japan.

Outlet malls don’t always incorporate major department stores or supermarkets, but they do cater to people with cars. This aspect is particularly noteworthy in the case of the new mall in Kisarazu, which is the eastern terminus of the Aqua-Line bridge-and-tunnel route that connects Chiba’s Boso peninsula to Kanagawa Prefecture over Tokyo Bay. When this very expensive, 23-km highway was completed in 1997, one of its main purposes was to encourage visits to Kisarazu and the rest of Chiba by residents of Tokyo and Kanagawa, which includes the very large cities of Kawasaki and Yokohama.

That didn’t happen. Most of the traffic actually went the other way, if it went at all. When it opened, the toll was an intimidating ¥3,000 each way. As part of his election campaign platform, current governor Kensaku Morita promised to persuade the land ministry to reduce the toll, and now it’s only ¥800 one way (as a “test discount” that appears to be permanent), but still the tourists weren’t coming to Kisarazu. Instead, they went to the restaurant and retail complex built in the middle of the Aqua-Line. The Aqua-Line itself became the attraction, not the cities on either end of it.

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The Japan Communist Party opposes the proposed consumption tax increase

Ever since Yoshihiko Noda became prime minister last summer he has been staking his political career on approval for an increase of the consumption tax as a means of bringing the national debt under control. In the process he needs to convince everyone that it is the fairest tax there is. His one-note tone of self-sacrifice is starting to make people wonder, though. Last year a majority of citizens said they’d go along with a tax increase, but lately that number has dropped significantly. On April 2, the Mainichi Shimbun published the results of a phone survey that found 60 percent of respondents opposed any increase, a 2 percentage point increase from a month earlier.

So is it fair? The research institute of Daiichi Life Insurance studied the matter and found that a household of four (married couple, two children) with an income of between ¥4 million and ¥5 million would pay out ¥60,000 more a year in consumption tax if the rate went up to 8 percent, which, according to Noda’s current proposal, would happen in 2014. Then, when a second boost pushes the rate to 10 percent in 2015, this household will pay out ¥100,000 more than it does now.

In principle, the more money you make, the more you consume and thus the more you pay. And this is true to a certain extent. Daiichi Research found that a family of four making ¥8 million a year will pay out about ¥90,000 more per year when the tax goes up to 8 percent, and ¥150,000 more when it increases to 10 percent. So the gap between the lower and higher income groups at 8 percent is ¥30,000 and the gap at 10 percent is ¥50,000.

However, where the change will really be felt is in terms of disposable income, since starting in 2013 income taxes will also increase in order to pay for reconstruction of the disaster-hit Tohoku region. Though there will be deductions and exclusions that can make each taxpayer’s situation different, Daiichi found that, compared to 2011, taking all these new taxes into consideration the household that makes less than ¥5 million a year will have ¥310,000 less disposable income a year when the 10 percent consumption tax kicks in in 2015. The ¥8 million household will have ¥410,000 less in disposable income. Though the richer household makes twice as much money, it loses only 5 percent in terms of disposable income with the increase, while the poorer household loses almost 8 percent in terms of disposable income.

The consumption tax covers everything consumed, including food and other necessities. Consequently, the burden weighs more heavily on lower income households than it does on richer ones, since basic essentials are assumed to be about the same for everyone regardless of income. That means there is less money to spend on non-essential items and, presumably, lower income households won’t. Retailers and other commercial enterprises will have to compete more aggressively for upper income customers because those at the other end of the spectrum won’t be making as many purchases in order to make ends meet.