Yen for Living

It’s 10 a.m. Do you know where your grandmother is?

In July, the Bank of Japan released the results of its quarterly tankan survey of business sentiment for April-June. The most notable, and hardly surprising, result was the drop in confidence among major manufacturers. Less was said about the fact that domestic demand and individual consumption appear to be stabilizing. The numbers get even more encouraging when you look at specific industries.

In the tankan, an index of “0″ means no change in sentiment, with minus numbers indicating a loss of confidence and positive numbers a gain in confidence. The index for hotels and restaurants was +3, the first positive rise in five years, and a substantial one. Even more impressive was the index for “individual services,” such as travel agents, a category launched in 2004. The most recent tankan showed an index of +25. These numbers are at once heartening and baffling. Average income did not rise during the same period, which means consumption shouldn’t have risen, so why the increase in confidence?

The report’s authors credit these hopeful signs to people over 60, and smaller businesses’ resourcefulness in tapping this demographic. A recent article in Tokyo Shimbun profiled an izakaya (drinking establishment) chain called Hokkaido, which has an outlet in Kokubunji, Tokyo, that offers a special hiru enkai (daytime party) plan: If each member of a party orders at least ¥3,500 in dishes, then the party can drink as much as they like without paying extra.

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One of the original planks in the Democratic Party of Japan’s 2009 platform, or manifesto as it’s normally called, was an overhaul of social security. Acknowledging that the national pension system was irreparably broken, the DPJ proposed tossing the old pay-as-you-go “insurance” model and replacing it with a system that paid benefits completely out of tax revenues. Upon retirement, every qualified person would receive ¥70,000 a month until they died.

Spend it if you got it: pension passbook

With Kaoru Yosano assuming the position of fiscal and economic policy minister in the newly reshuffled cabinet, that proposal is all but doomed. Yosano, who is against ditching the premium system, filled a similar cabinet position under the last Liberal Democratic Party prime minister, Taro Aso, so it’s not likely he’s going to change his mind even while toiling for the DPJ. In fact, Prime Minister Naoto Kan implied only a few days ago that the social security plan in the manifesto is not realistic.

What he means is that it’s not realistic politically. Practically speaking, it’s certainly more realistic than the present system, which the welfare ministry favors because they think it’s more clearly ethical when it’s really anything but. To receive benefits after retirement, one has to pay into the system at least for 25 years. If you pay for only 24 years and 11 months, you get the same benefits as someone who paid nothing: ¥0. (In comparison, in order to qualify for minimum social security in the U.S., you have to pay SS tax for at least 40 quarters, or ten years)

Rather than overhaul a failed system, the welfare ministry continues to tweak it. Two weeks ago the government approved an ¥80 decrease in the monthly premiums people pay into the basic national pension (kokumin hoken), from ¥15,100 to ¥15,020. Though the drop seems hardly significant, the news of the drop is, since it is the first time since the social security system was launched in 1961 that premiums have been reduced. The reason for the cut is downward pressure on wages caused by deflation.

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