Japan Press Weekly

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2013 April 10 - 16 TOP3 [ECONOMY]

‘Abenomics’ widens gap between the rich and the rest

Media praise the continued depreciation of the yen and high stock prices as an outcome of Prime Minister Abe Shinzo’s “Abenomics” economic policy. However, as the government’s own research indicates, this policy is actually promoting the further polarization between the rich and the rest.

Encouraged by the steep rise in stock prices, the wealthy class has bigger consuming appetites. The Cabinet Office’s latest monthly Economy Watchers Survey quotes the following statements by workers and business owners throughout Japan:

“Pushed by higher prices, sales of expensive items mainly among the wealthy population, such as art works and jewelry, show a robust growth” (department store staff); “Watches, digital single-lens reflex cameras, and other expensive goods are being sold more, bringing a positive sign to our business” (electric appliance retailer); and “The sales of luxury priced newly-built condominiums have started to catch up, especially ones over 100 million yen for wealthy consumers.” (housing information magazine editor)

No spending growth among average consumers

Meanwhile, a convenience store owner said, as quoted in the research, “Sales are far below that of last year. With the uncertainty of economic growth prospects, the ‘Abenomics’ effect does not ‘trickle down’ to average citizens. They must still hold on tightly to their purse strings.”

A textile factory worker also commented on the research, “Most small- and medium-sized companies do not obtain benefits from the yen’s depreciation or higher stock prices. Due to cheap clothes from Southeast Asia rolling into the domestic market, the sales of ‘made in Japan’ goods have not increased at all. On top of that, many smaller companies are facing funding difficulties because of stricter loan screenings imposed by financial institutions.”

Downsizing continues

Without a pay raise in sight, ordinary people are expected to suffer from higher prices and unstable employment.

According to a research report released on April 5 by Tokyo Shoko Research, at least 34 listed companies have announced their plan to recruit voluntary retirees since the beginning of this year. The number of such companies in the last three months has already reached more than half the total number of companies doing so last year.

The research also shows that 16 companies, including Renesas Electronics Corporation and Fujitsu, want more than 100 employees to accept their retirement plans. The credit reporting agency expects that “workforce optimization” will be promoted even by companies that have experienced a business recovery.

A supermarket owner’s remarks are quoted by the Cabinet Office research as follows: “The adverse effects of the ‘Abenomics’ have become visible. Due to the steep rise in imported goods led by the weakened yen, prices of grains and fuel-related products will be most likely raised. Even if workers’ wages increase, it will be negated by cuts in benefits. As a result, household finances will deteriorate.”