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Examining Japan’s Middle Class

Japan’s Middle Class
Although the Japanese economy is the third largest in the world according to its nominal GDP, its middle class has begun to contract. Unemployment and poverty resulting from COVID-19 revealed new patterns of decreasing consumerism and stagnant wages. While Japan’s middle class is slowly disappearing, there are a few solutions from both corporate policy and grassroots organizations that are attempting to alleviate poverty and reinvigorate citizens with low income.

Poverty in Japan

In the 1980s, the once booming Japanese economy met economic stagnation during the 10 years known as the “Lost Decade,” spanning from 1990 to the early 2000s.

Before the crisis, which the real estate market caused, Japan’s annual GDP growth rate was 0.82% higher than that of the United States. However, the bursting of the real estate bubble lowered Japan’s growth rate to a feeble 1.14% during the Lost Decade. Many view the Lost Decade as one of the events that began the fading of Japan’s middle class.

From 2020 to 2021, estimates stated that one in six people living in Japan lived in relative poverty. According to some workers, open work is scarce in the aftermath of the pandemic, and Japanese media seldom covers these stories of hardship. Notably, women, who often take retail jobs with temporary contracts to balance work with childcare, experienced economic hardship after most retail shut down during the pandemic. In early 2020, around 40% of the labor force took on “non-regular” jobs, which pay lower wages and often end in swift termination.

Japan’s Middle Class

According to Oxford Economist Shigeto Nagai, a drop in consumer spending could follow the shrinking middle class. In 2020, after a steep increase in sales tax the year before, COVID-19 caused consumer spending to plummet further. Japan’s Ministry of Economy, Trade and Industry reported a 12.3% decline in retail consumption from 2019. More than 10 million Japanese citizens earn less than $19,000 per year, and having less disposable income exacerbates the issue of falling consumer spending.

A “life-time employment system” also contributes to the shrinking of Japan’s middle class. Companies value taking care of employees after retirement as well as seniority-based wages. This results in an emphasis on long-term company loyalty, and raises in wages are difficult to achieve. However, as previously mentioned, nearly half of the labor force participants work in non-regular jobs. This poses a significant problem to middle-class households in which stability is a necessity.

Alleviating Poverty

Established in 2000, the World Bank and the government of Japan conceived The Japan Social Development Fund (JSDF) to alleviate the effects of the Lost Decade. Since its founding, the government has provided approximately $855 million to support its projects. These projects aim to reach the population that often cannot access aid from charitable organizations, and intends to empower and protect impoverished communities. Similarly, small, grassroots organizations in Japan help alleviate poverty by providing support for their prefectures. For example, groups such as Food Bank Kochi and NPO Gift provide food and activities for communities that have become impoverished. The Kagoshima Volunteer Bank, which aims to teach and care for single-family households, provides educational services to communities.

In regards to the corporate world, economist Shigeto Nagai has suggested that start-ups in Japan will offer higher wages to new workers and recent graduates as compared to established corporations and that this type of shift in the labor sector could ultimately increase the economic flexibility of the middle class.

– Caroline Zientek
Photo: Flickr

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Refugees in Rwanda: An Inclusive Approach

Refugees in Rwanda
As of early 2019, estimates determine that Rwanda is host to approximately 150,000 refugees. To support this number, Rwanda maintains six refugee camps and four transit/reception centers, in addition to supporting refugee integration into urban areas. Rwanda is remarkable for its inclusive approach to refugees, most of whom are from Burundi and the Democratic Republic of Congo. The national government, UNHCR, the World Food Programme (WFP), the Government of Japan and other international, national and local organizations are all working to improve opportunities and livelihoods for refugees in Rwanda.

Approximately 79 percent of refugees in Rwanda live in the refugee camps, with the remainder — about 13,000 — living in urban centers. Rwanda gives refugees the right to do business and access health services, insurance, banking and education to promote integration. As of 2017, Rwanda had integrated more than 19,000 refugee students from Burundi into its national school system.

According to UNHCR, enabling the self-reliance of refugees is an essential part of its mission. UNHCR creates and supports initiatives that allow refugees to contribute to the economic development of their host country.

Ali Abdi has lived in Rwanda for 20 years after fleeing Somalia. After applying for a business card, he now runs a small convenience store and lives with his Rwandan wife. Ali described Rwanda as “a peaceful country” where “people do not discriminate.” He is thankful for his ability to be independent.

Supporting Refugee Entrepreneurs

In Kigali, the capital of Rwanda, many refugees like Ali are finding success in entrepreneurship. UNHCR labels Kigali as a “City of Light” for its accepting and supportive attitude toward refugees. The Government of Rwanda is actively working to promote the integration of refugees into the city with targeted assistance.

For refugees aspiring to own their own business, Inkomoko is a local business consulting firm that trains and supports refugees with UNHCR’s support. Beginning in 2016, Inkomoko’s refugee program has worked with 3,300 refugees, resulting in the creation of 2,600 new jobs across the country, a significant boost to the economy. The director of Inkomoko’s refugee program, Lydia Irambona, stated, “Our main goal is to help them increase their revenue, get more customers and understand how to do business here.”

Annick Iriwacu, a Burundian refugee, went to Inkomoko after a referral from her cousin. She has since opened a successful business selling liquid petroleum gas. The business has grown enough for her to now have five employees. She stated, “They gave me the strength and hope to continue, because I was giving up.”

Financial Support for Refugee Camps

While refugees in Rwanda’s refugee camps have fewer opportunities for economic independence and contribution, supporting and protecting them is still crucial. In June 2019, the Government of Japan donated $270,000 to UNHCR Rwanda to cover the needs of 58,552 Burundian refugees in Mahama, the largest refugee camp in the country. This is one of many donations, as the Government of Japan has supported Rwanda for six years and provided a total of approximately $7 million to the UNHCR to support Rwandan refugees.

UNHCR intends to use the 2019 money to maintain and improve refugees’ access to legal assistance and protection against violence, as well as health care services. Refugee camps in Rwanda provide primary health care and send refugees to local health facilities if they require secondary or tertiary care, which can be costly.

Supporting Refugee Farmers

Many refugees living in Rwandan camps want to become more economically independent, however. While the refugee camps provide displaced people with access to basic education and health facilities, many refugees have found that working allows them to take further advantage of what Rwanda can offer them and their families.

The IKEA Foundation, UNHCR, the World Food Programme, the Government of Rwanda and the Food and Agriculture Organization have all provided funding. These organizations are working together to improve the livelihoods of both refugees and local Rwandan farmers.

In the Misizi marshland, 1,427 Rwandans and Congolese refugee farmers are working together for agricultural success. The project is also generating social cohesion, as the Rwandan and refugee farmers are learning to work together and recognize the benefits of cooperation. As of early 2019, these farmers had produced more than 101 tonnes of maize, the profits of which enabled them to feed their families.

Rwanda’s Example

Rwanda intends to continue its inclusive approach to refugees them become successful and independent whether they live in camps or cities. Refugees have found success in Rwanda because its government and international partners are working hard on their behalf.

While there is still more work to do to ensure that refugees in camps have access to work opportunities and that refugees in cities receive support in achieving economic independence, the nation serves as an example of how to successfully help refugees begin new lives and contribute to a country’s economy.

– Sara Olk
Photo: Flickr