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Aging Japan forces youth re-think

From Rebecca MacKinnon, CNN Tokyo Bureau Chief

Japan's aging society is eating up the pension funds and creating insecurity towards the future for the young.
Japan's aging society is eating up the pension funds and creating insecurity towards the future for the young.

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More and more ambitious young Japanese are leaving corporate jobs to strike out on their own.
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TOKYO, Japan (CNN) -- Toshihiko and Keiko Naito are enjoying their golden years.

Ballroom dance class is one of the many things they can enjoy together now that Toshihiko has retired from Mitsubishi, where he spent his whole working career.

Still, they are not as financially secure as they once expected to be.

"When I planned for retirement, I assumed I'd get five percent interest on my savings," Toshihiko said.

"I never imagined rates would be virtually zero for so long. But I feel like I can't complain because it will be a lot worse for the younger generation when they retire."

Worse indeed.

Japan's population is aging rapidly, and birthrates are falling sharply. More people are retiring than there are young people entering the workforce, which means people now working and paying into pension funds can expect to see most of their money used up by the time they retire.

And with even fewer babies being born, experts say in three more years Japan's population will start to shrink.

"We are entering a realm in which even in terms of the pension of your old age you have to be prepared to take risks," said economist Noriko Hama from Doshisha University.

"So, there seems to be no answer which provides a full guarantee to the people."

The system is further shaken by young people who won't conform to the traditional Japanese family structure. (Full story)

"It is a very inefficient working economy, in that respect, that the pool of talents is there but the antiquated system refuses to tap into it," Hama said.

Hama thinks the mismatch between the social system and economic reality should be rapidly resolved.

"Otherwise, we are going to be stuck forever in this very strange situation of continuing deflation, aging population, and the dead lock pretty much everywhere."

Death from overwork

Meanwhile, bankruptcies, corporate restructurings, mergers, and layoffs have all meant that the legendary hardworking Japanese "salary man" is working harder than ever to keep his job.

But the question is if their companies are working hard at the right things.

Tomie Enoki wonders. Her husband, Masao, died of heart failure at the age of 42. Police say he was a victim of what Japanese call "Karoshi" -- death from overwork.

"He sacrificed himself for them and I'm horrified by the way he was treated." Tomie said. "Sometimes he came home just to change his clothes, then went right back to work."

Tomie and her teenage daughter are part of a growing community. Last year alone, 317 Japanese like Masao died of Karoshi.

Lawyer Hiroshi Kawahito, who represents Karoshi victims, believes overwork is as bad for the companies as it is for the human beings who work for them.

"Exhaustion caused by long working hours contributes to a lack of creativity in Japanese companies," Kawahito said.

New generation

In search of creativity and more tolerable working conditions, Hoshiharu Sato and Junko Sechibaru decided to quit their jobs at a large corporation.

Now they run a two-person software business, operating from the loft of a log cabin in the mountains.

"In my old job lots of the time was wasted commuting and on corporate politics," Sato said.

He said he worked long exhausting hours but felt very inefficient.

It used to be that ambitious young people saw lifelong jobs in big corporations as their ticket to success.

Now, more and more young Japanese have decided they're better off leaving their large, inflexible, debt-ridden companies and are striking out on their own.

Yoshito Hori took the leap early in 1992, soon after Sumitomo Corporation sent him to Harvard business school. He quit to start his own company.

"The economy is composed of two things. One is old Japan which is declining, and at the same time, new Japan which is increasing," said Hori, who now runs Globis group, Japan's biggest business school using Harvard's case studies.

"New Japan is totally different. It's more dynamic, global, entrepreneurial and innovative."

Globis Venture Capital invests in new businesses started by former students, who in Hori's view are "coming out to change Japan."

Economists say these young entrepreneurs will definitely be the winners in today's world where economic strength depends on knowledge and creativity, not the assembly-line conformity of Japan's manufacturing past.

People of the Naito's generation may grumble, but their living standards remain the envy of most other Asians, and for that matter, most people on the planet.

Ironically, young Japanese will need to find new ways of living and working, if they want to retire just as happily.


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