Editorial: As prices soar, parties must show path to reduce economic gap in Japan election

Campaigning has officially kicked off for the House of Councillors election slated for July 10 in Japan, and one of the key points of contention centers around rising prices that are putting a strain on people's lives.

In particular, low-income earners are taking the brunt of the price surges. The serious economic gap that was laid bare during the coronavirus pandemic could widen even further.

What each political party is called upon to do is to present a vision for a society where people can live with peace of mind.

Last week, more than 180 people braved the rain to line up at Zojoji Temple in Tokyo's Minato Ward. At the event, people in single-parent households received food from Minato Kodomo Shokudo, a nonprofit organization operating a children's cafeteria providing free or low-priced meals to local kids.

The number of those who came for the handouts has doubled from a year earlier. In addition to the prolonged pandemic, rising prices that have been accelerating amid Russia's invasion of Ukraine are taking a heavy toll on family finances.

One single mother in her 40s earns less than 100,000 yen (about $740) a month as a part-timer at a souvenir shop. The amount is below half that before the pandemic. While customer traffic is picking up, she says the benefits of the sales recovery were preferentially passed on to regular employees.

Her two daughters -- one in university and the other in high school -- have supported the family through part-time jobs. Even then, their earnings are not enough to sustain the household, and the government's 100,000-yen parenting support allowance ended up covering their educational expenses.

Price increases have dealt an additional blow to the family. When the single mother prepares supper, she makes it a rule to cook only one dish with cooking gas due to soaring utility bills. "Food items that do not require gas help a lot," she said, as she took canned foods home.

As coronavirus case numbers are on the decline, the unemployment rate has improved, making it appear as if the Japanese economy has turned around. However, there are many people who have seen their wages go down and their income remain low even though they have retained their jobs.

According to an estimate by Nomura Research Institute Ltd., as of March 2022 there were some 1 million non-regular workers who had their work shifts curtailed by half or more but had not received leave allowances to cover the loss. Though the figure marked a decline from some 1.4 million people in February 2021, it still remains high.

Kana Takeda, an expert researcher who conducted the survey, commented, "The structure where employment remains unstable has not changed. We might fall into a negative cycle of consumption being dampened by rising prices and companies cutting back on personnel costs due to declining revenue."

The rate of consumer price hikes topped 2% in April, a level seen for the first time in 13 1/2 years except for when the consumption tax was hiked. When it comes to daily necessities such as food items and utility costs, the rate is close to 5%. Meanwhile, wages have hardly increased, and the actual salary after deducting price rises has again contracted from the previous year.

The ruling Liberal Democratic Party is advocating a price curb measure through subsidies to industries. In his opening campaign speech for the upcoming election, Prime Minister Fumio Kishida emphasized, "We will prepare countermeasures focused on the energy and food sectors and take thorough steps."

Opposition parties, meanwhile, have highlighted measures to support household finances, such as temporarily reducing the consumption tax. Kenta Izumi, head of the main opposition Constitutional Democratic Party of Japan, argued, "We must not allow politics that disregards family budgets."

But if the parties are to take mere stop-gap measures, anxiety among the public would not be dispelled. It is essential to change the structure where employment remains unstable and wages struggle to rise.

Naohiko Jinno, a professor emeritus at the University of Tokyo, said, "The bond between people, which supports their livelihoods, was destroyed by neoliberalism, leading to poverty. Just handing out cash would not be able to fix this. We must transform our economy and society so that people can support each other."

-- Rectifying the economic gap a pressing issue

The Japanese economy is at a key juncture. Under the "Abenomics" economic policy mix promoted by the administration of former Prime Minister Shinzo Abe, which prioritizes growth and efficiency, non-regular workers came to account for 40% of the total workforce. The adverse effects of neoliberal policies betrayed themselves under the coronavirus pandemic.

Economic globalization following the end of the Cold War helped circulate cheap products worldwide, prolonging a low-inflation period. This trend has drastically changed due to the Ukrainian crisis.

It is an urgent task to fundamentally review economic policies. And yet, the government still retains its decade-old Abenomics mindset as the linchpin of its economic policy. While Prime Minister Kishida has called for a turnaround from neoliberalism, his signature "new capitalism" initiative marks a return to the growth-oriented strategy.

Under Abenomics, the government aimed to boost major firms' revenues through a weaker yen brought by the Bank of Japan's quantitative and qualitative monetary easing, possibly leading to wage hikes. Regardless, wages did not increase, and those policies have now become the very factors to push up prices.

Japan is pressed to break away from its dependence on the falling yen and address wage disparity. The government has the responsibility to create an environment where companies can aggressively raise wages. In order to improve the working conditions for non-regular workers, it is imperative to raise minimum wages and promote efforts to turn these workers into permanent employees.

It is also necessary to redistribute income through tax and social security systems. The government should turn to big companies and the affluent population to call for them to carry their fair share of the burden. It also needs to promptly raise taxes on financial gains, which Prime Minister Kishida once shelved.

Consumption can only improve when people can secure a basis for living at ease. Each political party needs to clarify a road map to expand redistribution policies during their campaigning for the upper house election.