Thursday, July 22, 2010

A Very Strong Indication the Standard of Living is Falling in Japan

NYT reports the following:

In October 2008, when the world was reeling from the collapse of Lehman Brothers and job markets were freezing up everywhere, Akane Natori waltzed into a new position she liked. “Things went so smoothly after applying online, and before I knew it, I had the job,” said Ms. Natori, who was then a 26-year-old sales assistant at an import-export company in Tokyo.

There was just one catch, one that speaks volumes about the Japanese economy and the challenges younger Japanese face in a country where college graduates used to count on lifetime employment with the company they joined right out of school. Ms. Natori’s new job — working in a call center answering queries from customers in Japan — was in Bangkok.

Under fierce pressure to cut costs, large Japanese companies are increasingly outsourcing and sending white-collar operations to China and Southeast Asia, where doing business costs less than in Japan. But while many American companies have been content to transfer work to, say, an Indian outsourcing company staffed with English-speaking Indians, Japanese companies are taking a different tack. Japanese outsourcers are hiring Japanese workers to do the jobs overseas — and paying them considerably less than if they were working in Japan.

Japanese outsourcers like Transcosmos and Masterpiece have set up call centers, data-entry offices and technical support operations staffed by Japanese workers in cities like Bangkok, Beijing, Hong Kong and Taipei....
Transcosmos pays a call center operator in Thailand a starting salary of about 30,000 baht, or $930, a month — less than half of the ¥220,000, or $2,500, the same employee would get in Tokyo...
Japan lost 240,000 jobs in May, government statistics showed, bringing the seasonally adjusted number of people with work to a two-decade low.

It's one thing to have locals man call centers, but when you are importing workers (in this case from Japan) it is a very strong indication that there are few new opportunities in Japan. It's understandable why call centers outside of Japan would want to hire employees, who speak Japanese as a first language, for their call centers, but there is no strong reason that someone from Japan would generally take a lower paying job outside Japan, other than jthat jobs at the same rate are not available in Japan. With the growing age of the Japanese population, that the young are leaving the country is not a good sign. The Japanese pension system is built somewhat along the lines of the Ponzi-scheme U.S. social security system. With the young leaving, it will mean an even smaller base, to support the aging population.


  1. My guess is that even though they're paid less in absolute terms, they probably still have a higher standard of living on a relative basis than if they had stayed in Japan at a higher salary.

  2. @Taylor Conant

    Yes, a "higher" standard of living if they don't mind moving to a foreign country, being separated from friends, family and culture...

  3. Anon,

    Of course, you're right, I was making a point in strictly monetary purchasing power/material terms. There are obviously other costs involved. But still, the fact that some people DO make such a tradeoff demonstrates that even being disconnected from their family, culture and friends they judge they are able to enjoy a higher standard of living making the move to Thailand, even at a lower wage.

  4. @ Taylor

    The fact that they are getting a better standard of living outside Japan is precisely the point.

    You usually don 't get people, for work purposes, moving from industrialized countries. Witness the Mexicans, Eastern Europeans and Africans coming to the U.S. and the Eastern Europeans, Africans and Middle Easterners headed to Western Europe.

    It is a sign something is wrong in Japan.

  5. Wenzel,

    I get your point but, just to play DA here:

    Japan is full of Korean, Chinese, Thai and other Southeast Asian immigrants. Is that by itself a sign that something is wrong in those countries? Maybe.

    Point is, it's hard to tell from this particular anecdote if this is a trend due to deteriorating economic conditions, new business technologies and efficiencies or even changing preferences of Japanese people themselves.

  6. In an ironic twist:
    I have a Korean friend who emigrated to Taiwan for financial reasons.
    I have a Taiwanese friend who emigrated to Japan for financial reasons.
    I also have American friends who emigrated to Korea for financial reasons.

    So who's really on the bottom of the food chain here?