Archive for September, 2013

Young women’s life preferences acknowledge workplace reality

Friday, September 27th, 2013

Preference or default?

Preference or default?

Social media has been buzzing about the results of a survey released this week by the Ministry of Health, Labor and Welfare. The survey was carried out last March among men and women, both single and married, between the ages of 15 and 39. The results that provoked the most discussion had to do with attitudes toward marriage, or, more precisely, a woman’s role in a marriage.

When asked if they want to be full-time homemakers, 34.2 percent of the female respondents said “yes” or “probably.” And while more women, 38.5 percent to be exact, said they didn’t want to be homemakers, the portion who said they did was apparently higher than people expected, especially now that the government is pushing an agenda to make it easier for women to join the workforce and contribute more directly to the economy.

Some people are saying that these results indicate a regressive attitude among women, but it’s impossible to say from the results that the women who want to be homemakers are being guided by some kind of cultural gender identification.

When men were asked in the survey if they wanted their wives to be homemakers, 19.3 percent said “yes” or “probably,” which implies that the other four-fifths want their wives to work. That’s because they know that a single income isn’t enough any more to support a household, especially one that does or will someday include children.

When the women were asked how much income they thought their husbands should make a month, 40.8 percent said ¥200,000-¥300,000, 24.8 percent said ¥300,000-¥400,000 and a mere 4.2 percent said “it doesn’t matter.” So much for marrying for love.

A more likely reason for this desire to stay at home is a perceived understanding of workplace norms, something the labor ministry didn’t ask about. In a different survey conducted by the Japan Management Association, young men (751) and women (249) already in the workforce were asked if they aspired to be leaders among their colleagues. Of the female respondents, 81 percent said they would rather be “supportive.”

One of the more pressing issues in Japan is the paucity of women managers, a situation that is blamed on implacable male dominance in the workplace. The association analyzes this result as meaning that women value their private lives over their careers. In other words, they don’t think they can raise children or have families if they are in leadership positions. And, in fact, this is still a widely held belief.

You are where you eat: McDonald’s Japan sets prices by region

Thursday, September 19th, 2013

According to retail marketing research firm Soft Brain Field, McDonald’s is overwhelmingly the most popular fast food in Japan, with 68 percent of survey respondents saying they patronize the American hamburger chain regularly. When asked which fast food they like the most, the answer for 33 percent is also McDonald’s, with Mos Burger second at 25 percent and Mister Donuts third at 17 percent. Forty-two percent of McDonald’s users patonize an outlet once a month, and 29 percent do so two or three times amonth, more often for lunch (43 percent) than dinner (29 percent).

Why do they prefer McDonald’s? The most common answer is that it’s inexpensive and they can order as little as possible, meaning they can go there when they’re not in the mood for a full meal.

High overhead: McDonald's Roppongi Hills

High overhead: McDonald’s Roppongi Hills

The main underlying attraction of fast food is predictability. People who patronize national or international chains know what to expect in terms of quality and, more significantly, price. They probably think that prices are uniform from one outlet to another. The British newsweekly The Economist exploits and reinforces this perception with its occasional Big Mac Index, which analyzes relative values of national currencies by comparing the prices of Big Macs in all countries using the assumption that the value of a Big Mac is uniform.

However, if you go to McDonald’s American home page, prices are not listed, and if you do a web search you find that prices seem to vary slightly from one state or city to another, though it isn’t clear for what reason. Some people seem to think it has to do with differences in wages or local taxes or the fact that some stores are franchises while others are corporate-owned, but according to a recent article in Forbes, production costs have no impact on McDonald’s pricing, only competition. McDonald’s sets prices according to what the company reasonably believes it can get for its products in a given market at a desirable volume.

McDonald’s Japan also does not list prices on its home page, but it is fairly well known that prices differ from one outlet to another. These prices are not set by the outlets themselves. They are set by the headquarters, and on Sept. 10 the company announced that it was expanding the range of prices on its menu as well as increasing prices by as much as ¥50 per item. Since last year, the company’s profits have been dropping and it has pinpointed outlets that McDonald’s believes “can absorb price increases” without undermining its loyal customer base.

McDonald’s Japan first set up regional price schedules in 2007 by dividing Japan into six zones. Under the new system there will be nine zone categories, but these zone categories are not necessarily prefecturally-based. Urban outlets within a prefecture will have higher prices than suburban or rural outlets. Realistically, this means there will be seven different prices for a Big Mac, depending on the zone, ranging from ¥310 to ¥390, up from four different prices ranging from ¥290 to ¥340.

The highest prices will, of course, be in Tokyo. There is one zone within central Tokyo, made up of 10 outlets, that boasts the highest prices in Japan, and the overall price scheme has been formulated to support urban outlets, which serve the largest cross-section of customers. Rents and other overhead in the centers of large cities are multiplicatively greater than they are in the boonies, though prices are not multiplicatively different. The largest gap in prices between zones is ¥80, up from ¥50 before the changeover. Unaffected will be the prices for promotional loss leaders, like the “¥100 Mac” and Chicken Crisps, not to mention certain meal sets. In a sense, the countryside is helping support city folks’ fast food habits.

According to the Asahi Shimbun, the strategy is simply to maximize profits and has nothing to do with regional wage demands, local taxes or cost-of-living conditions. The company tested the new pricing system last April in a select number of outlets and determined that the number of patrons did not change when prices went up slightly. Overall, about 40 percent of the menu items will be affected by the price changes.

McDonald’s predicts that the price increases will boost its profits by 1 percent, which doesn’t sound like much but with an outfit as huge as McDonald’s that should amount to billions of yen. In any case, the lower yen has increased the price of imported ingredients, particularly meat and potatoes.

Aging boomers may prove to be just as tight with savings

Tuesday, September 17th, 2013

Praying is free (but the incense will cost you)

Praying is free (but the incense will cost you)

The media has been all over the new figures related to seniors that were released by the Ministry of Internal Affairs and Communications to coincide with Respect for the Aged Day. To recap, the number of Japanese people over 65 increased by 1.12 million from the previous year, which marks a 0.95 percent rise.

The big news is that this brings the total number of seniors to about 32 million, or one-fourth of the entire population. This was expected since the huge cohort of baby boomers — which in Japan refers only to people born during a brief period in the late 1940s — is now passing the 65-year mark, and the projection is that seniors will make up a third of the population by 2035. To break down these portions even further, 18 percent of the population is over 70, 12 percent over 75 and 7 percent over 80.

What hasn’t been discussed as widely is the economic ramifications of these developments. In 2012 there were 5.95 million people over 65 who were still in the work force, or 9.5 percent of all workers over the age of 15. The average amount of savings — whether bank accounts, annuities or securities — of households with more than one person where the householder is at least 65 is ¥22.57 million. The average savings of all households is ¥16.64 million. Also, 16 percent of over-65 households have savings of more than ¥40 million, while only 10 percent of all households have saved that much.

The hope has been that once they retire boomers will spend their savings more readily than did previous generations, but so far that doesn’t seem to be the case. The ministry’s statistics indicate that more money is being spent by seniors who are still working. Those who aren’t working, meaning they are on fixed incomes provided by government or company pensions, are spending much less.

In either case, working or not, the seniors are not touching their savings. They are only spending their income. In the parlance of economists, they are asset rich but cash poor. The average income of an over-65 household is ¥2.96 million (that of an average household in general is ¥5.8 million), but the median income of an over-65 household is ¥2.29 million, meaning the majority of these households are within the ¥1 to ¥3 million income range, and that’s what they are living on.

A Cabinet Office survey conducted in 2011 asked seniors what the purpose of their savings was. About 62 percent said it was for sudden illnesses and future care and 20 percent said it was for “maintaining existence” in case of an unexpected financial problem. Only 5 percent said they would spend it on leisure, and a mere 1.6 percent wanted to use it for travel. It should be noted that 90 percent of these respondents owned their own homes or did not pay rent, so housing, at least, was not a primary concern. However, given the cost of private nursing homes, which charge upwards of ¥20 million just to move in, it’s perfectly reasonable to think that seniors believe they have to save for those final years. Until that sort of anxiety is addressed, it will always be difficult to get seniors to part with their savings.

Roomba rules with working moms

Thursday, September 12th, 2013

There has recently been a discussion in the Japanese language media about an article that novelist and Nippon Foundation head Ayako Sono wrote for the magazine Shukan Gendai.

Roomba to move

Roomba to move

Sono, who will turn 82 next week, encouraged working women to quit their jobs after they gave birth, not so much because she believes a mother should devote all her attention to her children, but rather because it is “selfish” for working mothers to place such a burden on the companies they work for by demanding they hire them back at full pay after maternity leave. Women who make such a demand don’t understand reality, Sono says. She herself put up with being “poor” when she had her children, relying on her husband’s salary only, and thinks women today should do the same.

Regardless of Sono’s blinkered view of the reality of married life today, the amount of money that working mothers contribute to the Japanese economy is not chicken feed. It’s estimated to be about ¥6 trillion, according to a cover story in the business magazine Toyo Keizai. The Ministry of Internal Affairs and Communications reports that the average disposable income of a double income household is more than ¥4 million a year, while that of a single-income household with a full-time homemaker is about ¥3.6 million.

Moreover, a research laboratory, Dentsu Soken, says that the “direct economic impact” of women who go back to work after giving birth is ¥3 trillion, and the secondary effect of this spending, in terms of added jobs and investment, is worth something like ¥6.4 trillion.

If these women weren’t working they wouldn’t be making that money and thus wouldn’t be spending it, and much of what they spend it on has to do with saving time, because they are so busy with both their jobs and their kids. This waamama (working mother) boom has resulted in brisk sales for three home electronics products that were originally aimed at narrower, higher-income niche targets: washing machines with built-in dryers, dishwashers and robot vacuum cleaners.

It’s the last of these, spearheaded by the American-made Roomba, that has really taken off, and the appeal to working mothers is clear. They simply turn it on and the machine cleans the room by itself, while the mother does other things, like go shopping or play with her children.

The Roomba was originally promoted for seniors, and the price is pretty steep, about ¥80,000, though some discount retailers may sell it for ¥70,000 or even less. The subsequent Japanese copies, made by Toshiba and Sharp, start lower, at about ¥50,000, and are becoming popular, too, but Roomba dominates, with 73 percent of the robot vacuum cleaner market, according to Seed Planning Research. Of course, the household could probably save even more money if the husband chipped in with the housework, but since Sono didn’t talk about that we won’t either.

Men start taking advantage of nursing shortage

Friday, September 6th, 2013

Two posts ago we talked about how difficult it is for men to become flight attendants in Japan, where the job is still considered women’s work. However, another occupation that in the past was solely associated with women, nursing, is now openly encouraging male applicants, and the men are signing up. In the West, of course, there have been male nurses for decades, but because of tenacious gender roles and the fact that nursing is still a poorly paid position, Japanese men until recently have never tried to break into the field. That’s changing.

Web ad for Komatsu Nursing School in Ichikawa Prefecture with representative gender ratio

Web ad for Komatsu Nursing School in Ichikawa Prefecture with representative gender ratio

According to health ministry surveys, there were 63,000 male nurses working in Japan in 2012, which is two-and-a-half times the number ten years ago and six times the number 20 years ago. Nevertheless, this number only accounts for 6.2 percent of all the nurses in Japan. It is still overwhelmingly considered a woman’s job, but the numbers are increasing. Asahi Shimbun reports that 17 percent of the 112 students who enrolled last spring at a nursing school in Atsugi, Kanagawa Prefecture, were male. The portion of men among the new class was even larger at a nursing school in Osaka City — 28 out of 118.

What’s significant, however, isn’t the portion, but the age range. The youngest are just out of high school or college, while the oldest is in his mid-40s. Since nursing schools are essentially technical schools (senmon gakko), they don’t follow the archaic university custom of effectively limiting enrollment to recent high school graduates, and many men who want to change career paths are opting for nursing.

One 31-year-old student at the Atsugi school told Asahi that he worked in the administrative department at a preparatory school after graduating from university, but he was always a contract worker and his salary never rose the whole time he worked there. Now that he’s married and has a child, he wants something more stable and potentially lucrative.

A 22-year-old fourth-year student at the Osaka school, which opened in 2010, thus making him a future alumnus of the school’s first class, said he originally wanted to be a paramedic, but his mother suggested nursing because she had read that local governments were cutting budgets for ambulance service. He’s already been offered a full-time job at a general hospital in Osaka.

Almost all nurses are hired as full-time regular employees with benefits, because the demand for nurses remains high. In 2013, the health ministry estimated a nationwide nursing shortage of 42,000. The projection for 2014 is 30,000, which takes into consideration the number of people who will be graduating from nursing schools next year, though it doesn’t necessarily factor in turnover, which is high.

The annual turnover rate nationwide is 10.9 percent, but in major cities, where most nurses work, it’s over 14 percent. The reasons are obvious: long and late hours, demanding work conditions and pay that many don’t think is fair compensation. Almost all nurses are women, and when they get married or have children they often decide to quit the business altogether.

The chief nurse at a hospital in Otaru, Hokkaido — a woman, it should be noted — told the Asahi that her department was actively recruiting male nurses because they are perceived as looking at the occupation in the long term, as a real career, as if women didn’t. “We can reduce turnover,” she said. The health ministry says that there are 550,000 “hidden nurses” in Japan, meaning women with nursing licenses who no longer work as nurses.

According to the National Personnel Authority, the average monthly pay for a 37-year-old nurse in Japan is ¥346,000, while that of a 35-year-old general office worker is ¥320,000, so actually the pay is slightly above average. Moreover, the Japan Nursing Association says that pay for nurses were not adversely affected by the recession five years ago. Starting salaries tend to be pegged to educational level: though all nurses must go to nursing school and pass a test, those who went to university beforehand usually start at higher salaries than those who are only high school graduates.

This is another area where men have the advantage. Men who enter nursing now tend to be college graduates, while women usually go to nursing school right out of high school, or even junior high school. Traditionally, many women became nurses by going to high schools with nursing programs. Another change that has made nursing more attractive is lighter work loads. In 2006 the health ministry implemented guidelines that mandated one nurse per seven patients in a hospital. Previously, the ratio was one to ten.

How economically effective are the Olympics?

Monday, September 2nd, 2013

Group effort: Poster promoting Tokyo's bid for the 2020 Olympics at a mall in Chiba Prefecture

Group effort: Poster promoting Tokyo’s bid for the 2020 Olympics at a mall in Chiba Prefecture

The Asahi Shimbun recently reported that one of the reasons the Japanese government has been slow to tackle the water leak crisis at the crippled Fukushima Daiichi Nuclear Power Plant is that it doesn’t want to draw attention to the problem while Tokyo remains a candidate for the 2020 Olympic Games. Despite the fact that the Olympics are supposed to be hosted by cities not countries, Japan’s central government is counting on the games to boost its overall economy, and Asahi also reports that the decision, which will be determined on Sept. 7, will have a very strong bearing on whether or not the consumption tax increase will take place in April. If Tokyo is the winner, the tax will go ahead as planned.

The Japan Olympic Committee is predicting a long-term economic boost of ¥3 trillion if Tokyo gets the games. That’s a lot of money, but while it may offset the negative effects of the consumption tax increase temporarily it’s hardly enough to kick start the entire Japanese economy. In any case, how exactly would the Olympics bring about this financial miracle? After the games last year, the city of London and the U.K. government jointly announced that the event benefited the British economy by almost £10 billion (¥1.5 trillion). However, the BBC questioned just how much of this “impact” could be directly attributed to the Olympics. In addition, the Financial Times wondered about the government’s calculation that the Olympics would have a secondary effect on the British economy that would amount to between £28 billion and £41 billion (¥4.2 trillion-¥6.0 trillion) until the year 2020. A financial expert interviewed by the FT said he had no idea how the government arrived at this figure.

To get some idea of how this “economic effectiveness” (keizai koka) is calculated, the Nihon Keizai Shimbun evaluated the figures submitted by the Tokyo Bid Committee for the 2016 Olympic Games, which Tokyo lost to Rio (page 5). Included in the ¥2.94 trillion that was to be added to the Japanese economy by the games was ¥332 billion in the form of construction outlays, ¥175 billion to be spent by “guests,” ¥356 billion in sales of official merchandise and “related purchases” (like TV sets that people bought to watch the games), and ¥86 billion from tourists who would visit Tokyo before the games, presumably drawn to the city because of the Olympics though they would not actually attend them.

Moreover, the JOC predicted a “ripple effect” of ¥990 billion in related “demand” after the Olympics ended, and then a secondary effect of ¥650 billion from the higher salaries and added jobs that this ripple effect would engender. Except for the construction costs and revenues for restaurants and hotels during the actual two-week Olympic period, all these figures are speculative and based on phenonema that are difficult to measure. For instance, isn’t there a lot of overlap between the spending of tourists and the purchase of merchandise related to the Olympics?

The point is, when the media says that the 2020 Olympics will boost the Japanese economy by ¥3 billion people think that means ¥3 billion will be added to the economy, but actually most of that money is simply being redistributed. Tokyo, for instance, says it will spend ¥1 trillion on the 2020 Olympics, and according to the JOC the city has ¥400 billion “saved” in what it calls junbikin (preparation money), which is cash that the prefectural government has accumulated at a rate of ¥100 billion a year. However, it is all from taxes, which means that the money that goes to construction came from residents.

Moreover, the central government has pledged to cover any shortfall in operating expenses for the Olympics, so presumably that means it will provide the remaining ¥600 billion (or more), which also comes from tax money. Since most of the work that is created directly for the Olympic Games is done by volunteers, this money is not necessarily going to people in the form of employment and wages. The assumption, or at least the hope, is that Olympic money that goes to big corporations will eventually trickle down to people in the form of the aforementioned ripple and secondary effects, but, as the FT expert implied, there’s no way you can confirm this until it actually happens.

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