Osaka - Sunday, March 21, 2010

From a TV programme that went on air in the evening of Saturday, March 13, 2010, Japanese people today seem to be changing from what they used to be and/or the stereotype that many people around the globe have on them. The TV programme staff had implemented survey to Japanese people on various topics and the answers were introduced in the programme. Although some results (answers) were as anticipated, some were surprising to the MCS and guests of the programme, and to the author.

From the answers to the questions, the author would like to try to give insight of how attitude and behaviour of Japanese people have been changing, together with background, in this article and upcoming articles. In this article she focuses on income and personal financing aspects.

1. How Japanese people are changing in general?

At least from the answers to the questions, though they do not necessarily cover all aspects of people's attitudes and behavior, it is prominent that mindset, attitudes and behaviours of Japanese people have been changing. This is in line with the recent Mckinsey Quarterly March 2010 article "The New Japanese Consumer" by Salsberg (2010), in which the conclusion was that Japanese consumers are becoming more like western counterparts. In general, Japanese society and attitudes and behaviours of Japanese people are becoming westernized.

2. What was the question asked to Japanese people about savings and income, and how did they answer?

The question asked was "do you/your household have saving?" The result was that only 3% answered that they do have saving. This was a shock to MC and guests of the TV programme because Japan used to be famous for its high saving rate; as mentioned in the TV programme saving rate used to be as high as 25% a few decades ago.

3. What are the reasons for drastic drop in saving rate?

This was not discussed in the TV programme but the author would say the primary reason is drastic drop in saving rate. This has changed mindset, attitudes and behaviour of Japanese people.

1) Income of Japanese in general stopped increasing and employment are no longer guaranteed after the bubble economy.

The primary reason for sharp drop in saving rate is the fact that income of majority of Japanese people stopped increasing after the burst of bubble economy. In high-growth period (1955 - 1969), stable-growth period (1970 - 1985) and bubble economy (1986 - 1992), their income constantly increased with constant economic growth. Seniority system and lifetime employment also guaranteed their employment and constant income increase.

During these periods they could plan their personal financial with relative ease and buying houses and cars with loans (including paying much money back by bonus) was not a problem. This is one reason why Japanese people used to (could) prefer high-end department stores and pricier regional supermarkets, and willing to pay prices for quality products, as mentioned in McKinsey's article mentioned above.

However, with the burst of the bubble economy, their income increase and employment are no longer guaranteed. Unemployment rate started to soar. With restructuring, people in 50s, then 40s, and recently in 30s are losing their job. New graduates have difficulty in getting a job; they graduate in March and start working in April but 20% of new graduates who should start working this April still have not found a job.

2) Decrease in income has effect on the society.

It has been pointed out for some years (and in the TV programme) that increasing people has less than 3 million yen income per year, when "3 million yen income per year" is said to be the bottom line of making a decent living. It is officially regarded that people below this level income is of poverty.

People categorized in this poverty zone include those with skills, competencies and motivation and working hard, long hours, not only who are unemployed. "Working poor" was coined to describe such people. Indeed, to the author's surprise, there are some people reported in news who die from hunger, in developed country of Japan that is supporting financially to other countries as ODA etc.! Such people, although are of poverty zone, feel guilty of benefitting from welfare aid and do not ask for the aid. It is with this situation that, a well known Japanese economist wrote a book on "How to live by 3 million yen income per year" a few years ago.

3) Decrease in income also has been changing mindset, attitudes and behaviours of Japanese people.

Japanese people used to have strong sense of "belonging to middle class", but after the bubble economy bursted and especially from Koizumi administration period when bipolarization became so prominent, many Japanese people started to emphasize that there are winners and losers. While there are exceptional "riches" including those who made much money by IT business etc., many of ex-middle classes are falling to the poverty zone.

Under such a circumstances, people, including those who used to be described as "money spenders", became rather steady, hunting for value, as mentioned in McKinsey's survey result mentioned above, and came to be strategic in personal financing and saving for all ages (and career building). People in 30s and 40s who were brought up in economic growth and bubble economy were often described as "spend and enjoy today, tomorrow should be OK" compared to older generation described as "limit spending today and save for tomorrow". But with less income, people in 30s and 40s started to change their attitude about spending.

People in 20s, born after the burst of bubble economy, are "be steady today because you never know about tomorrow". Therefore, in general they are extremely steady in money spending and strategic in their life plan and personal financing including saving.

However, the TV programme indicates that negative effect of decrease in income and unstable employment seem to be greater than such positive effect to increase saving. This led to drop in saving rate, which seems westernization on the surface.

The topic of the upcoming articles is marriage and divorce, from the same TV programme.