Business and Economics

The Tokugawa period of Japanese history saw economic development really begin. The class of merchants was considered to be a very low class of people, but over time they acquired wealth and power, eventually being in an economic position far better than the samurai themselves.

More and more towns grew, the population increased and construction trades, banking trades and labor unions began to grow. Osaka and Kyoto developed into trading and handicraft centers, while Edo became the supply center for food and other consumer goods.

The opening of Japan to foreign powers served as a further stimulus to economic development which eventually led to World War II when the Japanese felt that foreign powers were going to get some type of strangle hold raw materials that Japan needed. The war eventually led to the destruction of much of Japan, especially due to the firebombing campaign, and a disintegration of their economic base.

In the years afterwards the Japanese began a very purposeful, very rapid economic development so that they would be at the level of the other nations. This development continued until Japan became almost the "miracle nation" in economics. Unfortunately, this type of economic growth could not continue forever. Due to corruption and bad business practices of banks, the Japanese "bubble economy" collapsed and Japan is still recovering from that.

It's interesting when you look at household income and expenditures for the late 1990's in relation to the economic downturn. From 1984 until 1997, Japan had a steady increase in household income. 1984's level was some 424,025 yen and this increased to 595,214 yen in 1997. Likewise, disposable income increased from 359,353 yen in 1984 to 497,036 yen in 1997.

During the next three years, though, there was a steady drop in both measures. In 1998 the income went down to 588,916 yen, a drop of about 7000 yen. In 1999 the income fell further to 574,676 yen and in 2000 it dropped even further to 560,954 yen, about 35,000 yen less than a few years earlier.

Disposable income also decreased, going down to 472,823 yen in 2000. Another sign of the downturn is seen in the GDP rate of Japan in relation to other countries. In 1999, the GDP rate of the U.S. was 4.2 percent; France was 3 percent, Italy 1.4 percent, but Japan was only .2 percent., showing that the country was now growing economically very, very slowly and far behind the rate of other major world powers.

In the year 2000, of 64.5 million workers in Japan, 53.6 million were employed by companies, 7.3 million were self-employed and 3.4 million were working in family businesses. 70% were in service industries, 25% in industry, and 9% in agriculture.

The unemployment rate showed an increase from 1991 on, reaching some 5.6% in 2001. At the same time companies began tightening up their own economic belts by reducing employment "adjustments" which tended to artificially increase the worker's income. The companies began to restrict overtime, push for voluntary retirement and moving people around within a company rather than going for totally new hires.

The unemployment problem is hitting the youth and the elderly particularly hard with many companies no longer hiring youth straight out of colleges and no longer overing "lifetime employment" to the older workers.

Another thing that companies are doing (just like in the U.S.) is using temporary workers rather than hiring permanent workers, thus lowering the companies expenses since they don't have to provide the same types of perks to the temporary workers.

Another factor controlling income is the size of the company a person works for. The annual income is 73% higher for those working in companies with 500 or more employees than those working at companies with 30 or fewer employees. Although the actual base incomes are not terribly different, smaller companies off much smaller bonuses (if any), thus effectively decreasing the income of those workers.

As in the U.S., there is also a difference in income based on gender. Women earn about 60% of what men do for similar work. Men get promoted more quickly then women (if women even get promoted at all), and they tend to work for more years than women do. There is still a lot of pressure on "office ladies" (secretaries, in a way), to work a few years, quit work to marry and have children, then come back to work some years later. There is also a higher proportion of women working in the smaller companies, helping to keep their wage levels down compared to what they would earn if they were employed by the larger companies.

A major difference between American Japanese companies is in the way they treat the workers. In Japan, many companies still provide company housing and will even pay for commuting expenses, employees meals during work hours, and provide recreational facilities. All these also, in effect, increase the worker's effective income since their living costs under this type of system would be much lower than without the extras provided by the company.

There are also cultural differences between the U.S. and Japanese businesses. In Japan, decisions tend to be made by consensus rather than having one person make all the decisions and the others have to automatically follow them. There is also sort of a "paternalistic" approach in Japan where companies provide workers with employment, living places, good insurance, etc, in exchange for the worker's loyalty to the company which can include working extra hours, socializing after work with other workers or clients and participating in other group activities.

Thus, there is sort of a symbiotic relationship between the workers and the company with the realization that the company needs to take care of its workers and the workers need to take care of the company by doing the best they can on their jobs.

The U.S. system is based more of the dictatorship form of business practices where the way the business is run will be dictated from the top down with little if any concern for the welfare of the workers. The companies provide what is required by law such as their contributing a share to the social security payments of the workers, but anything else that is provided the workers is usually done in a begrudging manner.

Companies do not provide company housing and do not pay for employees meals or travel expenses (unless they are specifically on company business doing travel). The general attitude of American companies is that their workers are things to be used much as the slave-master relationship during the period before the Civil War in the U.S. This approach, of course, does not encourage worker loyalty which will result in more sick time taken, a lower level of production and workers growing to resent the attitude of the company.

Thus, although the Japanese economy is going through an economic downturn the companies still tend to have a much more positive attitude towards their workers than American companies have towards theirs.

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