Japan confronts rising inequality after Abenomics

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TOKYO, Oct 12 (Businesshala) – Japan’s stock market has rallied and luxury cars are selling fast in Tokyo after eight years of economic stimulus under Abenomics, but this new money is rather widely distributed, data shows. concentrated in a small section of society.

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Addressing that divide has become a high priority for new Prime Minister Fumio Kishida, who promised to tackle income inequality worsened by the pandemic. But he has given some clues as to how he would do that.

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“Everybody seems to have gotten poorer,” said Masanori Aoki, 62, who owns a small coffee shop in a working-class district in northeast Tokyo.

“With Abenomics, the finance minister talked about money laundering. But there was no such thing, was there? There was almost nothing,” said Aoki, who was forced to leave by the COVID-19 pandemic. But had a job as a part-time kindergarten bus driver. To temporarily close your shop.

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Kimi Kobayashi, 55, who works at a childcare facility in Tokyo, says her wages have not increased for four years. He said that many people working in the industry have resigned from the fact that salaries rarely increase.

“I can’t say that my livelihood is getting better,” Kobayashi said. “Government collects tax but that money is not used to help those who are really in need.”

Abenomics — huge monetary, fiscal backing and a growth strategy that boosted stocks and corporate profits — failed to build wealth among households through higher wages, data shows.

According to the organization’s survey, based on data available as of 2020, Japan’s poverty rate is the second highest among G7 countries and the ninth highest among OECD countries.

Government data shows that nominal wages grew just 1.2% from 2012 to 2020. According to another government survey, the average wealth of Japanese households fell by 3.5% from 2014 to 2019 – although the top 10% of the wealthiest saw an increase.

To be sure, the inequality is far more pronounced in countries such as the United States and Britain. Japan stood out among 39 countries surveyed by the OECD in 2020 based on the Gini coefficient, which measures inequality.

The situation improved for some in Japan. Manabu Fujisaki recently swooped down on Mercedes-Benz worth 7 million yen ($61,800) after receiving a sizable amount from investments in cryptocurrencies.

“Abenomics gave us investors huge profits because (central bank) money-pumping pushed up the prices of financial securities,” said Fujisaki, 34, a father of two who plans to build a 200 million yen house in Tokyo next year. “

Department store Takashimaya says there is a strong demand for Patek Philippe watches, which cost more than 10 million yen, and Baccarat chandeliers worth a few million yen.

Alfa Romeo sold 84 of its exclusive models with price tags in excess of 20 million yen, during the Golden Week holidays from late April to early May – making Japan its top-selling market globally.

Alfa Romeo sales in April-September more than doubled from a year ago. Industry data shows that sales of other import brands such as Ferrari, Jaguar and Maserati have also increased.

“We are seeing a clear increase in the demand for luxury goods among the new wealthy,” said Takahiro Koike, manager of department store Isaten, referring to the newly wealthy young entrepreneurs and other high earners.

Kishida hopes to reduce wealth inequality by creating a “new type of capitalism” that includes higher wages for public health and medical workers, and tax incentives for firms that raise wages.

But failing to achieve the Wall of Money under Abenomics will be challenging. Already, Kishida had shelved plans to impose higher taxes on capital gains and dividends.

Shigeto Nagai, an economist at Oxford Economics, said offering a shot-term tax break would not persuade firms to raise wages, instead calling for reforms in areas such as Japan’s harsh labor system.

“First and foremost, politicians must discard the unrealistic and optimistic premise of Abenomics that Japan can cure all diseases by showing only nominal growth,” Nagai said.

($1 = 113.2700 yen)

Reporting by Kantaro Komiya and Leika Kihara. Editing by Gary Doyle

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