Japan rising?

I was in a four-storey toyshop in one of Tokyo’s main shopping streets for 20 minutes before I realised that there were no children—none. The rows of suited adults and pensioners, manipulating the little scuttling robots, sniffing the key rings that concealed a chamber of lip gloss, fingering the fluorescent pyramids of soft toys were—I hoped—buying a present for a child elsewhere. And alright, it was late afternoon on a Sunday, not in a residential district.

But the ageing of Japan’s society is a visible phenomenon, as well as a living laboratory for the problem that European countries are told they will face. (See Rachel Wolf and Paul Johnson.) Japan’s parks are full of agile 70 year olds and 80 year olds, jogging and stretching in immaculate sportswear. Many of them still run the country’s main companies and cities. Their secure perch at the top of politics and society—and their lavish pensions—have given Japan a peculiarly bitter version of the generation wars. The entrenched privileges of the older generation have been one reason why Japan has struggled so hard to escape from its 20-year-old economic stagnation, now referred to caustically as “the two lost decades.”

But the postwar generation’s experience of building a shattered country into the world’s powerhouse of cars, computers and microchips is producing new benefits. Many think it was the reason that Japan rebounded so remarkably in just four months from the earthquake and tsunami of 11th March, in which more than 15,000 people died, a further 7,000 are still missing and 120,000 are still unable to return home. “We maybe have the DNA to overcome calamities,” said Tatsuhiko Yoshizaki, chief economist of the Sojitz Research Institute.

Meanwhile, others say, it is a blessing in disguise that the generational imbalance is now so extreme. The numbers of elderly are so great compared to the young (see the charts, below) that it is forcing change in rigid labour practices, in the treatment of working women, and in politics.

The postwar baby boom produced the famed generation of “salarymen” and bureaucrats, working late in the new skyscrapers and factories for the good of their companies and country. But the birth rate fell to one of the lowest in the world—a phenomenon with complex roots, although many think lack of childcare for working women plays a big part, as well as hostility to immigration. The boom ended abruptly in 1989, with the implosion of the property and stock market bubbles, and the threat of bank collapses. As one senior bank economist put it: “Almost to the day that we went into hospital, China and India woke up.”

The postwar generation is retiring now, and the cost of paying those pensions has helped push Japan’s national debt towards 200 per cent of its GDP. Greece’s debt, by contrast, is “only” 140 per cent of GDP; and as one Japanese banker put it, “Athens feels very close to Tokyo these days.” Prophets of a debt crisis have been proved wrong repeatedly; the Japanese have shown a so-far limitless appetite to invest their savings in their own government’s debt. But many fear that this bargain will come apart as pensioners dip into their savings, and the pension bill rises even further. A typical pension may be about three times the wage for a young person on a short-term contract.

This fear has injected new sourness into the lament from the wartime generation about the failings of the young. “Young people are over-protected, indulged and dependent,” said Yasutoshi Nishimura, a member of parliament, and rising star of the LDP party, which ran Japan for 54 years since the war, until it was dislodged in 2009. “In the past, Japanese people were resilient, courageous. Our best resource is our wisdom—but we are losing that.” Or, as Shintaro Ishihara, the governor of Tokyo, put it: “Young people have a longing for a very shallow, glittering civilisation. It is a tragedy for Japan.”

These gibes have long been a staple of a certain kind of professional conversation in Japan. Nishimura acknowledges that “of course, some young people are entrepreneurs,” but these are not conversations where the older generation is typically generous to the young. They give little credit to the innovation shown in the fashion and hairstyles so visible on Tokyo’s streets, all spikes, angles and asymmetries. Yet even those more disposed to credit young Japanese with creativity confess they are puzzled by a cohort of university leavers that is less inclined to travel or study abroad than ever. In Yoshizaki’s view, for all the financial discomfort of being young in Japan today, “young people are just not that hungry yet.”

The earthquake, followed by the tsunami and the radiation from the meltdown at the Fukushima nuclear plant, shook up more than the landscape. It affected almost every car and semiconductor manufacturer, if not by shattering factories, then by breaking supply chains. Production dropped nationally by nearly a sixth. The Bank of Japan puts the cost at Y16-25 trillion, or 3 to 5 per cent of GDP.

But in June, just three months after the catastrophe, car production was back to normal. Several manufacturers cite a revival of the postwar spirit as a reason for the rapid repair. Governor Ishihara, who provoked criticism for calling the earthquake divine retribution for “much decadence, and 65 years in which we have been the concubine of America,” said: “Of course I sympathise with the victims, but at long last we have begun to find and rediscover the things we have lost.”

Yet there were already signs that Japan was beginning to find some answers to its predicament. In 20 years, there has been a revolution in work. At least a third of workers in many companies are now employed on short-term contracts—on lower wages, and without benefits or much security. Many of those are young people, but companies are also rehiring retired workers. “Sometimes they just want to be around the office, to stay with their friends, and they’re delighted for the work,” said Naohiro Yashiro of the International Christian University. “We prided ourselves on lifetime employment, but something had to give,” said a senior executive of the Bank of Japan.

The effects of these changes are undeniably painful for many. But they open the previously unthinkable chance to switch jobs repeatedly in a career. Some companies are looking at why so many married women leave work as soon as they have a child. There are signs that younger people are engaging more in politics; previously, as Yasutoshi Nishimura put it, “young people don’t vote—and politicians know it.”

Nuclear power is one battlefield; the wartime generation wanted to prove to the world that reactors could be safe, but their children and grandchildren are more sceptical. There is national impatience with Naoto Kan, prime minister, but the ruling DJP party, in taking the helm, has brought a sense of freshness to politics, as well as undeniable disorganisation.

The paradox of Japan is that although it created so many of the products that have revolutionised the way the developed world lives, it has been unable to extricate itself from its problems. “The strange thing about Japan is that it just goes on,” said Yoshizaki. “We have been too fond of the status quo.” Japan still has no answer to its debt, which hangs almost tangibly over any discussion of the future. But as well as reminding itself of its old resilience, it may be finally discovering more capacity for change.