Long-term stagnation after the collapse of the bubble economy and population decline are Japan's greatest structural problems today. The survival of the economy, social security, and local communities has become a major issue.
Basic Knowledge
From the 1990s onward, the Japanese economy suffered from deflation (falling prices) and low growth. In 1997, the consumption tax was raised to 5%; in the same year, Hokkaido Takushoku Bank and Yamaichi Securities collapsed, causing the 1997-98 financial crisis. In 1999, the Bank of Japan introduced a zero-interest-rate policy, and in 2001 it began quantitative easing. The cabinet of Junichiro Koizumi (2001-06) promoted “structural reform without sanctuary” and carried out postal privatization (the bill was passed in 2005 and implemented in 2007). In 2008, the Lehman Shock (a global financial crisis originating in the United States) severely damaged Japan as well. In the 2009 general election, the Democratic Party of Japan won and the cabinet of Yukio Hatoyama was formed, bringing the first full-scale change of government since the war.
1989 Total fertility rate of 1.57 shock
1994 Aging society → aged society (aging rate over 14%)
2005 Entry into a population-decline society
2007 Super-aged society (aging rate over 21%)
2008 Japan's population peak, about 128.08 million
2010 China surpasses Japan in GDP, Japan falls to third place worldwide
Further Study (Background and Effects)
Non-regular employment expanded, and temporary workers, contract workers, and part-time workers came to make up about 40% of the workforce. “Unequal society,” “working poor,” and the “lost generation” became social problems. Background factors included the 1997 revision of the Worker Dispatching Act, expansion of covered occupations in 1999, and legalization of temporary employment in manufacturing in 2004. In social security, the Long-Term Care Insurance System was introduced in 2000, creating a system in which society as a whole supports care for older people. In 2012, the second cabinet of Shinzo Abe was formed and pursued economic recovery through Abenomics (the three arrows: monetary easing, fiscal stimulus, and growth strategy). The consumption tax was raised to 8% in 2014 and to 10% in 2019 (with a reduced rate of 8%).
- “Lost decade” → “lost 20 years/30 years”
- 1997 financial crisis = collapse of Hokkaido Takushoku Bank and Yamaichi Securities
- Postal privatization = passed in 2005, implemented in 2007, Junichiro Koizumi
- Lehman Shock = 2008, global financial crisis originating in the United States
- Change of government = 2009, Yukio Hatoyama (Democratic Party of Japan)
- Long-Term Care Insurance = introduced in 2000
- Consumption tax: 3% (1989) → 5% (1997) → 8% (2014) → 10% (2019)
Points to Note (Easily Confused)
① Distinguish the standards for an aging society (over 7%), an aged society (over 14%), and a super-aged society (over 21%). Japan became a super-aged society in 2007. ② Arrange the order of Koizumi (postal privatization, 2001-06), Hatoyama (change of government, 2009-10), and Shinzo Abe (Abenomics, 2012-20). ③ The Lehman Shock (2008, originating in the United States) and the European debt crisis (from 2010, Greece and others) were separate crises. ④ Remember the “three arrows” of Abenomics: monetary, fiscal, and growth policies.
Practice
- Who was the prime minister who promoted postal privatization in the cabinet formed in 2001?
- What is the common name for the global financial crisis originating in the United States in 2008?
- What system introduced in 2000 supports care for older people through society as a whole?