Archive for the ‘News’ Category

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.

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.

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.

The sky becomes less of a limit for cabin attendants (unless you’re a man)

Friday, August 23rd, 2013

Screen shot of ANA's new Airline School, which opens in October

Screen shot of ANA’s new Airline School, which opens in October

All Nippon Airways just announced a new hiring policy for cabin attendants (CA). Starting next year, new CAs will be full-time regular employees of the company. Since 1995, CAs at the company were hired as contract workers who could opt to become regular employees after three years. The reason for the change is tougher competition from low-cost carriers (LCCs). ANA says in order to ensure the best service for their patrons they want to offer flight attendants better employment security. Currently, ANA employs about 6,000 CAs, 1,600 of which are contract workers. Next year, if these 1,600 want to become regular employees they can. The company plans to hire 450 new CAs in 2014.

The contract system was adopted by both ANA and Japan Airlines (JAL) in the same year, when the bubble economy had ended and Japan was entering its long period of sluggish growth. The object was to keep personnel costs in check. JAL says it has no intention of abandoning its contract work system “for the time being.” Twenty percent of its 3,800 Japanese CAs are contract workers. LCCs Peach and Jetstar only hire CAs as contract workers, while Skymark offers its contract CAs regular employment after one year. Though ANA’s policy change means its personnel costs will rise, the company thinks it can offset these expenses with reduced training costs.

Presently, when an ANA CA’s contract expires, she is offered full-time employment, but she can also opt for another 3-year contract. Over the years, 80 percent of ANA’s CAs chose regular employment. Contract workers are paid by the hour, and during the initial training period the wage is less than ¥1,000. That goes up to about ¥1,200 an hour until the end of the contract. JAL pays even less, about ¥1,100. Typically, a cabin attendant earns about ¥2 million a year while she is a contract worker, which isn’t much but CAs, even contractors, have some perks, like access to inexpensive company housing. However, the difference between contract workers and regular workers is striking. In 2001, the average yearly pay for CAs in Japan was ¥6.79 million, reflecting the fact that their ranks were still dominated by full-time regular employees. By 2011 the average salary had dropped to ¥3.85 million, reflecting the dominance of contract workers and newer regular employees rather than veterans who make more due to seniority. Last year it was about ¥4.8 million.

Another factor that influences pay is employment longevity. On average, Japanese CAs remain in the business for 7.4 years, and their average age is 31.2. In the past, it was the most coveted job for women in Japan, though not necessarily for career reasons. It was considered a glamorous occupation during a time when Japan was still isolated from the world, and thus offered women the only chance for overseas travel. (It was also the best way to put one’s English language skills to use. At one time, all English conversation schools has special classes for aspiring flight attendants.) Also, it was considered the best way to find a good husband, since sutchi (stewardesses) were also coveted as wives by eligible bachelors.

It was something of a joke in the 60s and 70s that professional baseball players and sumo wrestlers married either TV announcers or JAL cabin attendants. That may explain why the average age remains low: few CAs continued to work after they married, and if they did they usually tried to get transferred to the position of “ground hostess,” which is even more glamorous since there are so few of them. Also, while both regular employees and contract workers can take maternity leave, only regular employees can ask for shorter hours after they return to work. Tokyo Shimbun says that 10 percent of contract workers quit before their option to become regular employees comes up and one of the main reasons is that they become pregnant.

There’s little doubt that management has a certain image of what CAs should be. Only 1 percent of CAs in Japanese airlines are men. Though it’s against the law to discriminate in terms of gender, it seems obvious that airlines hire women predominately, and Japanese men who want to become CAs know this. According to an article in Newsweek, European and Middle Eastern airlines actively recruit Japanese male cabin attendants. Of the Japanese CAs who work for European and Middle Eastern airlines, 10 percent are men. In Asia, the portion is the same as it is in Japan.

New tax-free investment scheme not likely to increase investment

Thursday, August 8th, 2013

The acronym NISA has a checkered image in Japan. To most people it stands for Nuclear and Industrial Safety Agency, the now discredited government organ that did such an ineffectual job of policing nuclear power plants prior to the Fukushima accident of March 2011. On Jan. 1, 2014, the acronym will take on a different meaning as the Japan (Nippon) equivalent of the U.K.’s Individual Savings Account system, under which individual investors in stocks or mutual funds will not have to pay taxes on dividends and capital gains. It sounds simple and irresistible, but according to Tokyo Shimbun it may prove to be as resistible as that other more toxic NISA.

NISA application

NISA application

At present, dividends and capital gains are taxed at a flat rate of 10 percent on personal income as part of a government incentive program to boost stock investment that will end this year. Originally, the taxation rate was going to return to 20 percent, the rate levied on regular savings accounts, which is what the finace ministry wants. However, the Financial Services Agency (FSA) thinks that more average people should be encouraged to invest in stocks and helped pass the NISA law, which was modeled after Britain’s.

On the surface, the system seems easy. Anyone 20 years of age or older can open a NISA account with a financial institution, but is limited to only one, and for four years the individual cannot switch his or her account to another institution. The account holder can put up to ¥1 million a year into the account for five years, which means the maximum amount of non-taxable investment at any given time is ¥5 million. The tax-free system itself is limited to ten years, meaning no investments in NISA can be made after 2023.

Unfortunately, there are other conditions that experts are saying may scare average people away. During a given year, the individual can redeem any dividends or capital gains that are earned but he cannot reinvest that money back into the account during that year. He can, however, reinvest it the next year as part of the ¥1 million maximum input allowed during a single year. Also, at the end of five years he can roll over the ¥1 million he invested the first year, and the next year roll over the ¥1 million he invested the second year, thus maintaining a ¥5 million maximum account over time. However, once ¥5 million is reached, he cannot make any “new” investments.

Banks and securities companies will start accepting applications for NISA on October 1, and competition for customers is already heated. The Japan Securities Dealers Association is airing commercials for NISA featuring idol Ayame Goriki, and most companies are offering ¥2,000 cash premiums as an incentive to sign up. The stated target of the FSA is first-time investors and young people, but Tokyo Shimbun doesn’t think the message will get through. Financial journalist Minako Takekawa told the newspaper that she believes the new system will only appeal to people who are already investing, and that it needs to be simplified greatly if it’s to appeal to a wider consumer base. She says Britain’s system is easy and popular, with 40 percent of the population signed up. Like Japan’s, the U.K.’s ISA system was originally only meant to last 10 years, but it has since been made permanent, with financial services companies devising lots of products that take advantage of ISA, including regular savings accounts. Takekawa went to London earlier this year to study the system and found that “even people who don’t have a lot of money find it easy to use.”

Popular economist and TV personality Takuro Morinaga told Tokyo Shimbun that the reason NISA is so convoluted is that the finance ministry made it so. He says the ministry is “greedy” for more taxes and so have sabotaged NISA by making it too difficult for the average person to understand. The ministry was counting on a return to the 20 percent rate at the end of this year, and suddenly they’re getting nothing.

Of course, one aspect of NISA that most experts overlook is that it’s risky. Unlike regular savings accounts, an investor’s principal is not guaranteed or insured. Consequently, even if the system is simplified, older people will be reluctant to join. And as for young people, they don’t have any money to invest in the first place, at least not until their wages are increased.

Blood pressure medication huge cash cow

Thursday, July 25th, 2013

Low enough for you?

Low enough for you?

Earlier this month Kyoto University revealed that a study one of its researchers carried out to evaluate the effectiveness of the drug Diovan, which lower blood pressure, was probably “erroneous.” Though the university did not say the drug itself was ineffective, it did admit that the data of “those involved in the research” did not always agree with the conclusions of the lead researcher, Hiroaki Matsubara, which said that Diovan is “more potent in reducing angina and brain strokes than any other hypertensive medicines.” There are suspicions that Matsubara may have changed some of his data. In December 2012 he asked that his papers on the study be withdrawn.

Diovan, which is also sold generically as valsartan, was developed by the Swiss pharmaceuital giant Novartis Pharma K.K., which reportedly gave Matsubara a ¥100 million grant for his study. It wouldn’t have the first time the company has been accused of bribing doctors. Diovan is one of the company’s biggest moneymakers, especially in Japan where it generates ¥100 billion in sales.

Novartis isn’t the only drugmaker who does well with high blood pressure medications in Japan. Sales of hypertensive drugs amounts to more than ¥1 trillion a year, so even if Novartis had been trying to get researchers to post better results for their medicine, it seems that there’s enough of a market for every pharmaceutical company to make a lot of money with HBP medication. Some doctors, in fact, question the ease with which their colleagues prescribe HBP drugs.

In his bestseller, Isha ni korosarenai 47 no kokoroe (“47 Tips to Prevent Being Killed by Your Doctor”), controversial radiologist Dr. Makoto Kondo points out that there are 40 million people in Japan being treated for high blood pressure compared to 16 million in 1998. Why the big increase? In 2000, the health ministry, on recommendation from a panel of blood pressure specialists, changed the index for diagnosing HBP from 160/95 to 140/90, which is more in line with world standards. The new index immediately added 21 million people to the ranks of patients with high blood pressure, and almost all were prescribed hypertensive medication. Before the change, sales of HBP medicines was about ¥200 billion a year. Revenues have since climbed by more than fivefold. Kondo claims in his book that the specialists association from which the advisory panel was selected received an “anonymous” donation from a group of pharmaceutical companies beforehand.

Kondo believes that the dangers of high blood pressure have always been exaggerated, since blood vessels naturally become less elastic as people age and therefore the heart has to pump harder to achieve proper circulation. Reducing blood pressure too much can actually be dangerous, he says, since that could mean blood not reaching the brain and extremities in proper amounts, which may lead to senility and chronic loss of equilibrium. He cites a study in Finland that found elderly men with blood pressure over 160 lived longer than did those with blood pressure under 140. (Though it should also be noted that a more recent study in Finland found that people diagnosed with HBP who fail to take their meds have a higher chance of stroke.)

Kondo’s theories are generally dismissed by the medical community, but the Kyoto University scandal highlights an inconvenient truth about the financial connections between medical providers and pharmacuetical companies. Kondo says he has studied the literature extensively and cannot find reliable data that actually shows that a reduction in blood pressure leads to a reduction in the incidence of heart disease and stroke. Meanwhile, the Japanese government spends ¥37 trillion a year on medical care in the form of taxes and insurance payments, ¥6.14 trillion of which goes to drugs. That means hypertension medications account for one-sixth of all prescription drug sales in Japan.

Summer travel biz shows signs of recovery

Friday, July 12th, 2013

So close, and so far away

So close, and so far away

According to statistics released by Japan Travel Bureau on July 3, overseas travel this summer is projected to be up by 5.8 percent from last year, though continued sour relations with China and South Korea have seen fewer Japanese travelers this year to those two destinations. Another important consideration that doesn’t seem to have had a bad effect is the higher value of the dollar and other currencies against the yen. In terms of numbers, 2.6 million have reservations to travel overseas between July 15 and Aug. 31. The main bright spot is Europe, which will see a 15 percent boost in Japanese visitors as opposed to 2012. Also, Southeast Asia seems to be maintaining its popularity as a vacation spot. The average amount of money being spent per person on foreign travel this summer is ¥243,000, which is ¥11,800 more than was spent in 2012.

In addition, 76.2 million people have domestic travel plans this summer that involve more than one night away from home, which is the highest number since 2000. Even better, the average amount of money spent per person for these trips is ¥35,010, or ¥1,280 more than last summer. Several circumstances are credited with pushing up these numbers: the 30th anniversary of Tokyo Disney Resort; renovations to Ise Shrine in Mie Prefecture and Izumo Shrine in Shimane Prefecture; and Mount Fuji’s recent listing as a UNESCO World Cultural Heritage site and the intense media coverage that preceded it.

Continue reading about the recovery of tourism in Japan →

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