The Political Economy Review 2017

outsiders and therefore little incentive to make good returns on

equity and encourage more international investment.

Fertility Rate

However, it can be argued that these problems are eclipsed by Japan’s chronic injury: its labour market. Previously, life-long employment was a key part of Japanese society and Japanese workers were only fired under the most extreme circumstances. Japanese men would

be hired straight from school and put into training programs in companies where they would remain for the rest of their lives. Suddenly, increasing globalisation meant these companies were competing with International superpowers, which would do whatever it took to cut costs and increase productivity. Japan’s unwillingness to meet this standard by exporting labour to cheaper countries meant they had to instead develop a two-tier system which entailed an entitled “seishain” class who retained their ridiculous job-security and raises, and a lower-class group of workers who are underpaid and under-promoted with very little job security. This not only leads to more conservative strategies by older executives, but suddenly many working class Japanese men find themselves unemployed very quickly. This had a very significant knock on effect. Marriages and fertility rates decreased significantly as it is highly unfavourable in Japanese culture for women to marry unemployed men, creating an ageing population. Women can now be expected to have 1.42 kids on average, down from 1.81 in 1984 15 . Interestingly, if you look at real GDP growth per capita, Japan only has a 4% shortfall on the US. This illustrates why an ageing population is so devastating. As the working population decreases, the country becomes increasingly unproductive. However, it must be noted that countries like Germany and Switzerland with similar birth rates do not experience this stagnation. This is because they are willing to accept immigrant labour who bolster their workforce. This is yet another cultural barrier Japan needs to move past; large-scale immigration has always been highly resented. In fact, immigrants make up 1.6% of their population, compared to Germany’s 14.8% 16 .

With all things considered, all of Japan’s problems boil down to a simple issue: their conservative approach to cultural practices. Their initial downturn may have been caused by a banking crisis out of their control, but the inability of the Japanese people to return

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