Thinking about Poverty in Japan

I had an interesting conversation with Igarashi-san, who I met in a friend's party recently. He works in an NPO called Teach for Japan, which like its American sister (Teach for America) has a mission to ensure Japanese kids growing up in poverty get an excellent education by recruiting, training, and supporting young leaders to become brilliant teachers, who can then go out and inspire the children who need them the most. As we talked more, I was curious to understand what poverty meant in the Japanese context.

Having spent extensive years of my life in India, I am very much familiar with the term. It's a lot obvious and pervasive in India where according to a recent Work Bank estimates, 180 million people live below the poverty line, a little less than 18% of the country's population. This estimate is actually a lot lower than what was initially thought (~33%), thanks to a revised methodology. More than one third of the world's malnourished children live in India. So when I heard that 1 in every 6 households in Japan lived in poverty, I was indeed curious.

 Poverty is extremely complex to measure. One indicator that's commonly used is the percentage of people living below a Poverty line/threshold. This threshold is the minimum level of income deemed adequate in a particular country and is usually determined by finding the total cost of all the essential resources that an average human adult consumes in one year. And as you would expect, the figures changes quite a lot depending on what and whose definition and methodology you use. You can read a really nice synopsis on wikipedia.

 Another interesting measure is relative poverty, which is the percentage of households with income below the country's median household income. According to Organization for Economic Co-operation and Development (OECD), the mean household net-adjusted disposable income for Japan is $23,458. Around 16% of Japanese households fall under this median income, and single mother-households form a major demographic cluster in this.

 Japan's public debt is more than twice the size of its economy, and growing. And it was inevitable that the government had to raise taxes. The national sales tax was raised recently to 8 percent from 5 percent, and is expected to increase to 10% by October 2015. The regressive tax puts the biggest burden on the poor as basic necessities become more expensive. What's worrying is that in the longer run, problems associated with poverty such as worse access to quality education, poor health and crime could increase fiscal burdens and dent Japan's growth potential further by shrinking the pool of skilled workers.

How are Japanese companies supposed to create value-added jobs when there won't be enough skilled and educated people to fill those positions? There is a lot more for me to learn and understand as I spend more time here. It's somewhat disturbing yet incredibly fascinating on how the policies and choices made in the next few years will shape the future of this nation.