Working poor’s serious situation and countermeasures Japan needs to address

Poverty exists even in developed countries. The term “working poor” originated in the U.S., referring to people who work but earn below the poverty line, the minimum income required to maintain a living. The issue is beginning to gain visibility in some developed countries, and it has also been discussed in Japan since the 1990s.

32% of the total employment belongs to the working poor

Japan has not set the poverty line officially, so let’s assume that the poverty line is approximately 2 million yen per year, which is at the salary level of public assistance. In this case, there are 18 million people employed with an annual income of 2 million yen or less, meaning about 32% of the total employment falls under the working poor category, according to the labor force survey in 2021.

The working poor includes young people with fewer working years and lower wages, highly educated people who have completed a master’s or doctoral degree but have not been able to find a job that makes use of their educational background or a regular job, and middle-aged and older people who want a regular job but have fewer opportunities to improve their skills compared to younger workers.

Furthermore, even in the civil service, budget cuts and other factors have led to an increase in the number of non-regular employees of local governments who are working at low wages and in unstable jobs.

Reasons for the increase of working poor in Japan

Commonly proposed causes include the fluidity of the labor market due to the shift away from Japan’s traditional way of working, which was lifetime employment, Japan’s stagnant economy, and a small-government social security system.

Another cause is the increase in non-regular employment due to the “working style reform” that went into effect in 2019.

Countermeasures for the working poor

So how does Japan address the issue of the working poor?

Reviewing the minimum wage

To fundamentally tackle the issue, it is important to first increase the minimum wage. It was raised from 902 yen to 930 yen on average nationwide in October 2021, but some say that 930 yen is still insufficient, and the minimum wage must continue to be raised in the future.

Introduction of basic income

Basic income is a system under which the government provides its citizens with a uniform and unconditional minimum amount of money necessary for living. However, since no country has implemented a basic income system on a national basis, there are concerns about issues such as securing finances and reducing the population’s work ethic.

Employment assistance

Providing job placement assistance to the unemployed and helping non-regular workers change jobs to regular employment is also effective in addressing the issue. Expanding vocational training as part of employment support will also help non-regular workers acquire knowledge and skills that are useful for their jobs and make it easier for them to find jobs that provide a stable income.

When the existence of the working poor became prominent in the 1990s, coincided with the Japanese government’s promotion of neoliberalism, a policy of the small government and free market competition that reduced the state’s involvement in individual and market affairs. It led to the current social system which left people without a safety net, with those who are socially vulnerable being held responsible for their actions.

For people to live with peace of mind, the state needs to increase its involvement in protecting its citizens, as discussed above, and set up a system in which companies can increase wages even if they do not employ people for life.