Young blocked in Japan

TOKYO – Kenichi Horie was a promising auto engineer, exactly the sort of youthful talent Japan needs to maintain its edge over its Korean and Chinese rivals.

As a worker in his early 30s at a major carmaker, Horie won praise for his design work on advanced biofuel systems.

But like many young Japanese, he was a so-called irregular worker, kept on a temporary staff contract with little of the job security and half the salary of the “regular” employees, most of them workers in their late 40s or older.

As this fading economic superpower rapidly greys, it desperately needs to increase productivity and unleash the entrepreneurial energies of its shrinking number of younger people. But Japan seems to be doing just the opposite.

This has contributed to weak growth and mounting pension obligations.

“There is a feeling among young generations that no matter how hard we try, we can’t get ahead,” said Shigeyuki Jo, 36, co-author of “The Truth of Generational Inequalities.”

“Every avenue seems to be blocked, like we’re butting our heads against a wall.”

An aging population is clogging the nation’s economy with the vested interests of older generations, young people and social experts warn, making an already hierarchical society even more rigid and conservative.

The result is that Japan is holding back and marginalizing its youth at a time when it actually needs them to help create the new products, companies and industries that a mature economy requires to grow.

Last year, 45 percent of those ages 15 to 24 in the work force held irregular jobs, up from 17.2 per cent in 1988 and as much as twice the rate among workers in older age groups, who cling tenaciously to the old ways.

Japan’s media are now filled with grim accounts of how university seniors face a second “ice age” in the job market, with just 56.7 per cent receiving job offers before graduation as of December – an all-time low.

While many nations have aging populations, Japan’s demographic crisis is truly dire, with forecasts showing that 40 per cent of the population will be 65 and over by 2055.

Some of the consequences have been long foreseen. But a less anticipated outcome has been the appearance of generational inequalities.

These disparities manifest themselves in many ways.

As Horie discovered, there are corporations that hire all too many young people for low-paying, dead-end jobs – in effect, forcing them to shoulder the costs of preserving cushier jobs for older employees.

Others point to an under financed pension system so skewed in favour of older Japanese that many younger workers simply refuse to pay; a “silver democracy” that spends far more on the elderly than on education and child care; and outdated hiring practices that have created a new “lost generation” of disenfranchised youth.

Perhaps nowhere are the roadblocks to youthful enterprise so evident, and the consequences to the Japanese economy so dire, as in the failure of entrepreneurship.

“Japan has become a zero-sum game,” said Yuichiro Itakura, a failed Internet entrepreneur who wrote a book about his experience.

“Established interests are afraid a young newcomer will steal what they have, so they won’t do business with him.”

But many here say that Japan’s economy has ossified since its glory days, and that the nation now produces few if any innovative companies.

To understand why, many here point to the fate of one of the nation’s best known Internet tycoons, Takafumi Horie.

When he burst onto the national scene early in the last decade, Horie was the most un-Japanese of business figures: an impish young man in his early 30’s who wore T-shirts into boardrooms, brazenly flouted the rules by starting hostile takeovers and captured an era when a rejuvenated Japanese economy seemed to finally be rebounding.

He was arrested five years ago and accused of securities fraud in what seemed a classic case of comeuppance, with the media demonizing him as a symbol of an unsavoury, freewheeling U.S.-style capitalism.

He remains for many a popular, if almost subversive figure in Japan, where he is once again making waves by unrepentantly battling the charges in court, instead of meekly accepting the judgment.

He now has more than a half-million followers on Twitter, more than the prime minister, and publicly urges people to challenge the system.

Social experts say the need to cut soaring budget deficits means that younger Japanese will never receive the level of benefits enjoyed by retirees today.

Calculations show that a child born today can expect to receive up to $1.2 million less in pensions, health care and other government spending over the course of his life than someone retired today; in the national pension system alone, this gap reaches into the hundreds of thousands of dollars.

The result is that young Japanese are fleeing the program in droves: Half of workers below the age of 35 now fail to make their legally mandated payments, even though that means they must face the future with no pension at all.