The saying goes that whenever the United States catches a cold, Japan sneezes. For the last half century, the world’s second largest economy has shadowed the United States in economic and foreign policy.
But Sunday’s election marked a significant political change after citizens voted to oust the conservative leaning Liberal Democratic Party (LDP) that has held power for much of the post-war era and aligned itself with U.S.-style market policies.
Voters overwhelmingly decided in favor of the more liberal Democratic Party of Japan. While the U.S has had three presidents since 1993, Japan has had ten prime ministers to date.
The leadership failure and bureaucratic resentment was certainly a factor, but the results also served as a referendum against the LDP’s economic policies, which has widened inequality and eliminated social safety nets over the last two decades.
Voters expressed uncertainty about the failing economy. The unease was exacerbated by last year’s global financial crisis, but the liberalization of the labor force from the 1990s set the groundwork for today’s employment problems.
The rise of temp workers
To cut costs during the economic stagnation, many Japanese companies hired temporary workers, an affront to the long held tradition of lifetime employment. In contrast to their full-time employees, nonregular workers were subject to low wages and meager benefits, while lacking legal protections for layoffs.
The result has been the rise of a young labor force, known as “freeters,” who continually work in part-time jobs with little career growth.
The phenomenon proliferated with the explosion of temp agencies under former LDP Prime Minister Junichiro Koizumi. The measure was intended to help the economy recover at the expense of workers.
Nonregular workers in Japan’s workforce grew from 27.2 percent in 2001 when Koizumi entered office, and rose to 33.2 percent in 2006 when he stepped down as prime minister.
Though Koizumi was relatively popular during his tenure, his structural reforms have highlighted the gaps in Japan’s fraying social safety net. The problem came to a head with the massive layoffs of temp workers at the height of last year’s financial crisis.
Temp workers have significantly shorter unemployment insurance and many have relied on welfare. But with these workers constituting 34% of the country’s working population, half of those nonregular workers did not qualify for unemployment benefits.
In response, the DPJ seized the opportunity and campaigned on a populist platform pledging to support households battered by the two decades of economic stagnation. Their message, “Putting People’s Lives First,” focused on shifting away from the market-led reforms and increasing social benefits.
Battered economy offered ammunition
The DPJ had a lot of ammunition to use during the campaign. The unemployment rate hit a record 5.7 percent this July. The total number of jobless increased 40.2 percent from last year to 3.59 million. Average wages fell 4.8 percent for the fourteenth consecutive month in August.
The Friday before the election, the Labor Ministry reported that the ratio of job offers to jobs fell to an all time low of 0.42, meaning that there were 42 jobs available for every 100 job seekers.
In a syndicated editorial published last week before the election, DPJ leader (and future Prime Minister) Yukio Hatoyama addressed Japan’s economic malaise:
In the post-Cold War period, Japan has been continually buffeted by the winds of market fundamentalism in a U.S.-led movement that is more usually called globalization. In the fundamentalist pursuit of capitalism people are treated not as an end but as a means. Consequently, human dignity is lost.
Hatoyama, a former engineer, will be voted in by Japan’s parliament as the next premier in a matter of weeks. As the grandson of a former prime minister and the son of a foreign minister, he might not do much to dispel the history of nepotism in Japanese politics.
While this weekend’s political sea change has quelled the long held criticism of Japan being a one-party state, it’s now up to the DPJ to show voters that its platform for change will actually bring change.
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