Japan's Lost Generation

Japan Inc. is back, but millions of young workers have been left behind

by Ian Rowley and Kenji Hall

By just about any measure, Japan is back. The economy is growing at 2% a year, company profits are soaring, and land prices are rising. Unemployment, meanwhile, is down to 4% as Japan Inc. has started hiring again, with many college grads receiving multiple job offers. Suddenly, the future looks bright for a new generation of Japanese.

Try telling that to Sadaaki Nehashi. The 31-year-old contract worker at delivery company Yamato Transport makes just $1,100 a month sorting packages—about a third of the average income for full-time employees in Japan. Thats a step up from when he landed the job six years ago, though not enough for Nehashi to afford a place of his own, so he lives at his parents' modest home in central Tokyo. "I've had to lower my expectations a bit," says Nehashi, who graduated from university with a degree in marine biology in 2000. "But if I had waited around for a full-time job, I might have been waiting forever."

If a rising tide lifts all boats, then why are millions of Japanese like Nehashi treading water? There's an entire generation of people in their late 20s and early 30s who came of age during Japan's so-called lost decade, a stretch of economic stagnation that started to ease in 2003. Through that period, with Japanese companies in retrenchment mode, young people faced what came to be known as a "hiring ice age." Many settled for odd jobs or part-time work to make ends meet but hoped eventually to find their way into regular employment with the stars of corporate Japan. Instead, they're being passed over in favor of new graduates—a serious problem in a country that still values lifetime employment and frowns on midcareer job-hopping.

This group is called the "lost" or "suffering" generation. Some 3.3 million Japanese aged 25 to 34 work as temps or contract employees—up from 1.5 million 10 years ago, according to the Ministry of Internal Affairs. These young people have earned various less-than-desirable classifications in hierarchy-conscious Japan. They might be keiyakushain, or contract workers, typically lower-paid than full-time staff, with fewer benefits and minimal job security. Or they're hakenshain (people employed by temp agencies); freeters (those who flit from one menial job to the next); or, at the bottom, NEETS (an acronym coined in Britain that stands for not employed, in education, or in training). The plight of such folks was the subject of a recent TV drama called Haken no Hinkaku, or Dignity of the Agency Worker, the saga of a twentysomething temp who must put up with the snobbery of full-time colleagues despite her long list of qualifications.

SKILLS SHORTAGE
With Japan's economy on the mend, you'd expect the ranks of the underemployed to shrink fast. But the number of agency and contract workers continues to swell. To spur employment during the lean years, Tokyo made it easier for companies to add temporary employees. Now, even with fat times back, big employers are reluctant to take those people on permanently.

In their defense, Japanese companies say people from the lost generation aren't equipped to move into the middle rungs of the corporate world. "No matter how much companies want to hire from among this pool, many in their early 30s just don't have the needed skills," says Toshihiro Nagahama, senior economist at Dai-Ichi Life Research Institute. Employers also fear that freeters who have drifted from one job to another will be less loyal than ambitious grads hoping to work their way up through the ranks.

These millions of young people face a life that's vastly different from that of their parents. For Japan's postwar baby boomers, jobs provided certainty, spurring them to partner and procreate. Faced with insecurity, many of Japan's twenty- and thirtysomethings are doing neither. The number of marriages fell to 714,000 in 2005 from 1 million-plus in the 1970s. That could exacerbate a drop in Japan's birthrate, already among the lowest in the developed world. "You don't get maternity pay, and you have no job to return to—that makes it hard,"