Chapter 1: How affluent is the lifestyle of the Japanese people?

Japanese society has developed rapidly since the end of World War Two, and the standard of living of the Japanese people has steadily increased. However, many Japanese feel that the degree of affluence they enjoy lags behind their country’s economic power. In this chapter we shall investigate what has and what has not been achieved in 50 post-war years with respect to the lifestyles of the Japanese people.

Section 1: The Changing Pattern of Japanese Lifestyles in the Post-war Period
1.Changes in the Population Structure

(The Aging Population)

The Japanese population is rapidly aging as a result of decling birth and death rates. Comparing Japan’s population pyramid at two points in time, namely 1950 and 1990, we see that the 1950 pyramid was conical with declining populations in older age groups, whilst the 1990 pyramid is more ”bulb-shaped” with lower populations in young age groups and larger populations in the middle age groups.

(See Figure I-1-1.)

(The Changing Generational Structure)

Accordingly, the generational structure of Japanese society has also changed in the 50 years since the end of World War Two. The proportion of the Japanese population born after the war rose from just over half (50.6%) in 1975 to 66.5% in 1994. Furthermore, the percentage of ”baby boomers” in the population, namely those born after 1971 when high speed growth had rendered Japan an affluent society, reached 29.9% in 1994, or almost one third of the population. An affluent generation increasingly constitutes the mainstream of Japanese society.

2. Rising Income Levels and Japan’s Return to International Society

(Rising Income Levels)

Japanese society has steadily emerged from its post-war ruins to become one of the world’s leading economic powers. In dollar terms, average Japanese per capita income overtook that of Britain in 1972, and, as a result of the yen’s rapid appreciation, that of the United States in 1987, to achieve the highest level of major advanced countries. (See Figure I-1-7.)

Real income per capita also grew rapidly reaching roughly eight times pre-war levels (1934-6 average) by 1993. Also, Japan achieved average annual GDP growth of 3.6% in the post- First Oil Crisis period (1974-93) exceeding that of any other major economy.

(The Rise in Japan’s Global Economic Standing)

Japan’s share of aggregate global GDP rose from 4.1 % in 1960 to 18.3% in 1993. (See Figure I-1-15.) Also, although Japan’s post-war reconstruction was made possible by official aid from the United States, the World Bank and other sources, Japan had itself become a donor of overseas aid by the mid-1950s. Today, as one of the world’s largest economies, Japan is the world’s leading donor of official aid.

(See Figure I-1-18.)

3. Changes in Japan’s Industrial Structure and the Rise of the”Salaryman”

he shift away from primary industries towards tertiary industries is evident in both Japan’s industrial and employment structure, and has resulted in an overall shift towards a service-oriented economy. Also, a major change in Japan’s social environment has been the inexorable rise of the white-collar worker or ”salaryman”. Finally, changes in the employment structure have supported the participation of women in the labor market.

4. Urbanization

The shift in Japan’s industrial structure towards manufacturing and services has created many jobs in urban areas, resulting in a population flow from agricultural areas to cities. If one excludes the wartime evacuation period, the proportion of the Japanese population residing in urban areas has been increasing since 1920, resulting in the urbanization of Japanese society. However, because of the large-scale merging of cities towns and villages between 1953 and 1960, many cities have come to embrace agricultural areas, making urbanization figures based on the proportion of the population living in cities an unreliable measure of this trend. If we consider instead statistics for densely inhabited districts (DIDs), we see that the proportion of the population living in such districts increased sharply after 1947, and thus the immediate post-war years can be taken as the start of urbanization in Japan. The process of urbanization led to an increase in smaller households such as nuclear families, and the average size of a family unit has been declining since 1955.

5. The Growing Popularity of Higher Education and the Rise in Education Costs

Rising income levels in Japan have made higher education more popular in Japan. The proportion of students entering high school has grown dramatically in the post-war era, exceeding 90% in 1974, and reaching 95.7% in 1994. The proportion of students proceeding to university or junior college has likewise swollen. The number of female students entering university or junior college first overtook the figure for male students in 1989, with the proportions in 1994 being 40.9% for males and 45.9% for females. Also, the number of students proceeding to graduate education began to increase from the early 1980s. The trend towards higher education has led to greater outlays on educational expenses. A breakdown of household expenditure on education shows that the proportion spent on supplementary education, including ”Juku” schools, rose from 5.1% in 1960 to 25.4% in 1994.

6.The Rise in Living Standards

(Rising Consumption Levels)

Rising income levels have led to increased consumption in Japan, with the result that the Engel’s Coefficient for Japan fell from 63% in 1947 to 24% in 1994. At the same time, household expenditure on ”Transportion and Communication” rose substantially, as did that on either items falling under ”Other Consumption Expenditure”, such as ”Reading and Education” and ”Entertainment”. Expenditure household electrical goods also increased dramatically over this period, while the diffusion ratio of airconditioners and automobiles has also risen steadily.

(Declining Regional Disparities)

Inter-regional disparities have shrunk steadily over the post-war period. Per capita income disparities between prefectures in Japan, for example, began to decline after 1961. Also, plotting average per capita prefectural income in 1955 on the horizontal axis against per capita income growth between 1955 and 1992 on the vertical axis shows that the poorer the prefecture in 1955, the greater has been its income growth over the period. (See Figure I-1-32.)

(Changes in the Housing Environment)

Wartime destruction of housing in Japan resulted in an extreme dearth of housing units in the immediate aftermath of the war, but active housing construction thereafter led to a steady rise in the total number of housing units. In 1968, when the total number of housing units first exceeded the total number of households, Japan entered an era of one housing unit per household.

An analysis of ownership status shows that the number of owner occupiers has declined while the number of rental occupiers has increased. Regarding the type of housing, the proportion of detached and semi-detached/terraced housing units has fallen, while that of apartment-style housing units has risen. Also, the average living space per person, which showed no improvement in the pre-war period, grew significantly in the post-war period, and by 1993 had reached 2.2 times the 1934-6 average in the Tokyo area and 2.7 times for Japan as a whole. (See Figure I-1-36.) As a result of both the increase in per capita living space and declining household size, the number of persons per room fell from 1.16 in 1963 to 0.62 in 1993, demonstrating the growing desire for individual privacy. The improvement in housing facilities is witnessed by the growing proportion of housing units having their own bathrooms, and by the proportion with separate toilets and kitchens.

The evidence above shows that while the quality and size of housing units has steadily improved, the actual acquisition of a housing unit has emerged as a problem. Housing prices for Tokyo and Japan as a whole continue to rise, and the gap between average annual household income and housing prices remains stubbornly large.

7. The Decline in Working Hours

Total annual working hours in Japan’s manufacturing industry exhibit a clear declining trend, according to both the Management and Coordination Agency’s ”Manpower Survey” of individuals and the Ministry of Labor’s ”Monthly Labor Survey” of corporations. (See Figure I-1-40.) The Ministry of Labor’s Survey finds that total annual individual working hours fell below 2000 for the first time in 1993, reaching 1,957 for the manufacturing industry (or 1,904 for all industries surveyed) in 1994.

The main cause of the decline in total working hours lies not so much in less overtime hours, which is a function of prevailing economic conditions, as in the long term decline in the actual number of working days. In particular, the widespread adoption of a five-day working week between the first half of the 1970s and that late 1980s / early 1990s had a significant impact. However, although there is a clear downward trend in total annual working hours, a problem persists with respect to paid holidays, namely that while individuals’ paid holiday entitlement has increased slightly, the number of days actually taken has remained almost flat.

Section 2: The Current State of Japan’s Economic Society after 50 Post-war Years.

This section will consider the current state of Japanese society through an international comparison and through a survey of individual attitudes in Japan, and thereby identify important issues to be addressed toward the achievment of a more affluent Japanese society.

1. Affluence in the Japanese Lifestyle: The Current Situation and an International Comparison

(The Price Differential Between Japan and Other Countries)

The price differential between Japan and other countries is a major reason why Japanese people do not feel they enjoy a degree of affluence in keeping with their country’s economic power. Historically estimating this price differential shows that the problem emerged in the second half of the 1980s. (See Figue I-1-42.) Until the1960s, Japanese price levels were half those of the United States, but at the current time they are approximately 1.5 times higher. Also, if we compare American and Japanese price levels for 1994 by expenditure category in dollar terms, we find that Japanese prices are far higher in all categories, except medical and insurance expenditure, where Japanese government support works to reduce price levels. In particular, price levels of food, drink, housing construction, engineering works and non-electrical products are particuarly high in Japan.

Japanese per capita incomes in dollar terms are the highest of all major countries. However, the result is quite different if one considers per capita consumption expenditure adjusted for purchasing power parity of consumer goods and services, which factors in this international price differential. In these terms, Japan lay below the United States, Germany and other countries in 1994. Whilst the exchange rate, in the long run, is determined by the productivity of traded goods, domestic consumption levels depend upon the productivity of consumer goods and services.

(Social Infrastructure Provision)

The state of social infrastructure provision in Japan has steadily improved over the post-war period, as demonstrated by the upward trend in four representative indicators of social infrastructure provision, namely the percentage of sewered population, the diffusion ratio of flush toilets, the proportion of the population with running water, and the percentage of paved roads. (See Figure I-1-45.) However, even if one considers Japan’s particular historical and geographical circumstances, the level is still not satisfactory.

Running water is now almost universally provided, with 95.3% of the population enjoying this service in 1993. In contrast, only 71.9% of Japan’s roads were paved by the same year. Also, whilst the percentage of sewered population is increasing, the figure only crossed the 50% threshold in 1994. The diffusion ratio of flush toilets stood at 75.6% in 1993.

A simple international comparison of social infrastructure provision is difficult since definitions vary from country to country, but Japan’s achievments in the diffusion of sewerage services and flush toilets certainly falls short of other major countries. Also, the amount of open per space per capita in the Tokyo area is the lowest amongst major countries, although the situation is somewhat ameliorated by including land attached to detached houses, as well as temples and shrines.

Since the first half of the 1970s, Japan’s public investment as a percentage of gross domestic product has been above the major country average. However, in addition to extremely high land prices (to be discussed below), public investment confronts the same natural obstacles of topography, ground quality and earthquakes, as other industries. This is one reason why, despite high public investment, the provision of social infrastructure in Japan lags behind other countries. Finally, the failure to upgrade such elements of the social infrastructure as roads and ports also impacts price differentials between Japan and other countries by raising transportation and other related costs.

2. The Current State of Lifestyle Satisfaction in Japan

Although the Japanese people enjoy some of the world’s highest income levels, Japan still lags in such areas as housing and social infrastructure provision. How then has this affected people’s attitudes?

On this issue, the ”Public Opinion Survey on the National Lifestyle” conducted yearly by the Prime Minister’s Office asks the question, ”How do you feel your lifestyle is perceived by those around you?” In 1967, 89.2% of respondents answered ”average” and the percentage has remained almost unchanged to date. The Survey also asks, ”Do you feel your lifestyle has improved from the same time last year?” For the sake of simplicity let us consider the results of this question by subtracting, for each year, the percentage of respondents answering, ”It has deteriorated,” from the percentage answering, ”It has improved.” This indicator turned negative in 1974, the year of the First Oil Crisis, and has remained negative ever since. (See Figure I-1-51.)

For our purposes, the most pertinent question in the survey is probably that enquiring into the degree of satisfaction people feel towards their lifestyles. Following the approach above, we subtract the percentage answering ”unsatisfied” from the percentage answering ”satisfied” to derive a simple indicator of lifestyle satisfaction. Whilst this indicator declined sharply around the First Oil Crisis, it returned thereafter to an upward trend. (See Figure I-1-52.) Even without the soaring income levels of the high growth period, individuals have registered no noticeable dissatisfaction with their lifestyles.

The Management and Coordination Agency’s ”World Youth Survey” considers the lifestyle satisfaction felt by Japan’s younger generation in particular and offers an international comparison. (See Figure I-1-53.) The overall degree of lifestyle satisfaction registered by Japan’s youth is not particularly high. The degree of satisfaction regarding workplace lifestyles is particularly low, with that registered towards family lifestyles also being relatively low. Meanwhile, the degree of satisfaction with the general lifestyle of Japanese society was not so low in comparison to other countries.

Japan’s economic achievments in the post-war era have been dazzling. Japan’s per capita income, expressed in dollars, is higher than that of the United States. However, if one considers people’s attitudes to their lifestyle, the relative sense of improvement is weak, with general dissatisfaction regarding economic performance having grown ever since the advent of the stable growth period which followed the First Oil Crisis. Whilst Japanese remain relatively dissatisfied with their lifestyles in international comparison, the trend is now improving. All in all, most Japanese do not feel an affluence or degree of satisfaction with their lifestyles in keeping with their country’s economic growth record.

The gap between per capita income levels in dollar terms and the real purchasing power over goods and services which determines lifestyle quality is a problem of the price differential between Japan and other countries. Regarding this problem, the relationship between increased efficiency and lifestyle improvement was stressed many years ago in the 1967 White Paper on the Japanese Economy. This year’s White Paper on the Japanese Economy meanwhile focusses on the need to promote deregulation, the modernization of traditional business practices, and other such measures, in order to correct or reduce this price differential. With regard to improvement of the social infrastructure, it also stresses the need to reduce costs and improve efficiency.

In contrast, this FY1994 White Paper on the National Lifestyle focusses not on these economic aspects, but on the attitudes of the Japanese people which economic measures cannot grasp, and which exhibit a less positive trend than the obective rise in the Japanese standard of living. It will compare objective improvements with individual attitudes in three areas, namely the workplace, the family and Japanese society in general.

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