Japan's New Reiwa Era

“Japan – where every person can have hope for tomorrow” is the wish that Shinzo Abe, the Japanese Prime Minister, expressed in May 2019 for the new Reiwa (beautiful harmony) imperial era. For Mr. Abe, awakening a sense of optimism is part of a broader mission of national pride and reinvigoration. The Japanese Prime Minister is fully aware that his country faces a daunting array of challenges –its aging and shrinking population has major repercussions for sustained economic activity, and its heavy debt burden is a real obstacle to GDP growth; Japan must see GDP increase to survive. An all-pervading sense of anxiety also exists with Japan’s potentially vengeful Chinese neighbour offering a real security threat.

When Abe states ‘every person’ this means both men and women. Traditional Japan has been an exceptionally male dominated society, and though female participation rates in the workforce have increased significantly since the Japanese government introduced ‘Womenonics’ in 2013 there are still major deficiencies. Participation by women is greater in Japan now than in all the West (once among the lowest in the OECD – to a record 71%, surpassing both the USA and Europe). However, women are still mainly involved in low level occupations, and it is hoped that greater participation by women in senior roles will increase during the Reiwa Era. Japanese women also face the biggest gender pay gap in the G7, earning on average 25% less than their male counterparts. The changes require a significant psychological shift from traditional Japanese thinking, where women are in the future seen as equal to men – a shift that is being sought throughout the developed world. The Japanese government needs more reforms to flexible labour contracts, changed tax incentives and enhanced child minding and aged care services to better encourage women to full-time employment. Above all there needs to be commitment of both public and private sectors in closing this gender gap. 

With an estimated 30% by 2030 over the age of 65 years, the drain on resources and the reliance upon youth to pay for Baby Boomer pensions and aged care is totally unrealistic. For the first time ever, Japan is changing its immigration policies to bolster its workforce and combat any decline in GDP. Such immigration has already focussed on the low skilled worker with short to mid-term temporary visas, but lately higher skilled immigrants are now being encouraged with the opportunity for citizenship. This has obvious lasting repercussions on Japan’s sacred tenets of racial purity, however for many of the younger generation new blood is seen as a positive move. The concept of life-time employment is now becoming a thing of the past, as Japanese business must keep step with international human resource policies. 

Japan has been very much a conformist culture that puts a premium on stability and success. This naturally works against innovation in all its forms. In line with this Japan has one of the lowest rates of new business start-ups, and access to venture capital is extremely weak. Compared to the USA at US$99 Billion and China at US$69 Billion, Japan’s 2018 venture capital investment sat at a low US$1.5 Billion. A shift in psyche to greater risk and innovation is a must for future GDP growth. 

Japan’s archaic schooling of an exam-obsessed, competition-induced education is not keeping pace with the rigors of globalisation nor with the aspirations of its globally connected youth. With fierce competition in education individuals become rivals with their peers and thus the Japanese are less able to cooperate collegially in teams. Teamwork is a critical factor in any thriving start-up culture and thus education must shift to more open and co-operative formats where students become fully formed, creative, engaged, critically thinking human beings.  When reaching university these students will be far more willing to cooperate and learn new ideas. In addition, Japanese universities need to address the fear of foreign influence and attract an influx of international educators to offer more globally competitive and diverse education that, in turn, will create a culture of innovation. 

After the Great East Japan Earthquake and Fukushima nuclear disaster in March 2011, Japan’s energy self-sufficiency rate plummeted from 20.2% in 2010 to 11.5% in 2011. Since then, energy self-sufficiency has remained extremely low at under 10%. With the shutdown of most nuclear power plants, fossil energy now accounts for 89% of Japan’s energy needs, up from 81% in 2010. The youth of Japan, like elsewhere in the West, is pressing for an increase in renewable energy use and green technologies: ‘Go Green: Preserve the planet, preserve Japan’ is the catchcry. It is hoped that during the Reiwa Era the renewable energy sector will account for significant jobs growth. Irrespective Japan isn’t going to be a nuclear-free zone anytime soon and fossil fuel use will be around for years to come. The difficulty with developing new green technologies swiftly still lies in the fact that Japan is a successful adaptor and not so much an innovator – and this needs to change to see real gains in a cleaner and safer future for Japan.

Japan is faced with a huge task to maintain a lifestyle based upon increased productivity due to its rapidly shrinking workforce. Its antiquated work practices stemming from cultural norms have created poor productivity when decisions need to be made swiftly, time needs to be seen as a valuable commodity and output needs to be the key objective, not input. To achieve Japan is now rethinking the whole concept of work with an objective to become the world leader in robotics where employees will work with and alongside artificial intelligence on a daily basis. This will be a fascinating chapter in Japan’s evolution.

The success or failure of efforts to inject new dynamism into Japan will affect the whole world. As the most powerful democracy in Asia, and the world’s third-largest single economy, Japan is crucial to the global balance of power and its economic health. If China is to become the leading power of the 21st Century it must first achieve unquestioned dominance of its own region – and Japan represents both a physical and a political obstacle to China’s ambitions. 

For Mr. Abe, who is likely to step down in 2021, the issue of international resilience and domestic revival are urgent issues both for Japan’s survival and for his own positive legacy. China weighs heavily on the Japanese psyche and risks leading to a psychological dead-end. The existing fatalism about living within a China-dominated region has to be addressed by Abe; he needs to strengthen his country economically and militarily to combat the inevitability of China conflict. China’s navy and army are expanding rapidly, and the Japanese are painfully aware that modern Chinese nationalism feeds off hostility towards Japan, kept alive by memories of the Japanese invasion of the 1930s. 

At time of writing, COVID-19 has become a global pandemic. Barring this sudden crisis, it takes years, even decades to knock down a geopolitical order. That process of erosion is underway around the world today. China over the last decade has taken a long-term strategy of major investment in many of its Asian neighbours as well as African countries to ensure their effective political alignment with China. The Trump Presidency appears to be speeding up this erosion through promoting China as an unfair and near criminal trade partner. The US is encouraging a trade war as well as blaming China, fairly or unfairly, as the irresponsible and derelict epicentre of the 2020 pandemic. 

That Reiwa is the first imperial era whose name is drawn from a classical Japanese source, rather than Chinese literature, is a small symbol of self-assertion. But Mr. Abe has also taken some practical steps to bolster Japan in preparation for the inevitable further struggle with China. His government has reinterpreted the country’s constitution to allow Japan’s military to fight alongside the USA, should American forces be attacked. Defence spending is now rising. And Japan is also doing its utmost to cultivate India, Asia’s other emerging superpower and a fellow democracy, as an ally. 

The protectionism of US President Donald Trump’s White House has been a blow to Japan. But the Abe Government has managed to preserve the Trans-Pacific Partnership – a big regional trade agreement – that the Trump administration pulled out of. The West has always taken Tokyo’s protectionist trade policies to reflect the nation’s essential ethos – its xenophobic mentality, its dislike of the foreign. Such protectionism has been viewed by Americans as a problem of the Japanese. It is ironic that today America is now being caste as a global economic problem due to Trump’s protectionist trade policies. In this light Japan can no longer be viewed as an aberration but simply as a past pragmatist.

Over 70 years ago Americans halted Japan’s aggressive yet industrious advance to modernisation. It was an industrialised modernisation built upon an imperialist belief system that it had originally imported from the West. America’s defeat of Japan, and the imposition of an American democratic structure upon it assisted initially in overcoming the defeat of Japan’s imperialist aspirations. However, by General Douglas MacArthur simply using the existing power brokers and structures that he found, people who were in fact deemed war criminals, to install this ‘new’ democratic institutions, Japan’s true modernisation was delayed.

Mr. Abe has his political roots in the nationalist wing of Japanese politics, and he has maintained links to groups that have alarming attitudes to Japan’s wartime role. Irrespective he is intelligent enough to understand that in modern Japan a nationalist needs to be an internationalist, building alliances and international links that will allow Japan to thrive, even as China rises. That challenge is likely to define the Reiwa era. 

The question must now be asked: what is the true face of Japanese modernism, not that which has been imposed by America and has now run its course?  Today Japan has decided by itself to be a more active participant on the world stage. What face Japan next presents to the world is still hidden!