Believe it or not, ‘expensive’ Japan is actually underpriced

  • While Tokyo ranks among the most expensive cities to live in the price of goods here compared to other countries is actually quite cheap   GETTY IMAGESWhile Tokyo ranks among the most expensive cities to live in, the price of goods here compared to other countries is actually quite cheap. | GETTY IMAGES
    In annual listings of the world’s most expensive cities, Tokyo has typically been ranked at or near the top.Take the Mercer Cost of Living Survey, which recently reviewed 209 cities across five continents. Measuring the comparative costs of more than 200 items such as housing, transportation, food and so on, Ashgabat, Turkmenistan, emerged as the most expensive. It was followed by Hong Kong (which ranked first in 2019 and 2020) and Beirut. Tokyo held down fourth place, with the top 10 rounded out by Zurich, Shanghai, Singapore, Geneva, Beijing and Bern, Switzerland.
    Given Tokyo’s long-running reputation as a costly place to live then, the Aug. 28 cover story in Weekly Diamond deserves kudos for grabbing readers’ attention with the defiant headline, “Japan is too cheap.”Diamond paraded out some solid arguments as proof of its assertions: For instance, in the Group of Seven nations — Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — Japanese workers receive the second-lowest average minimum wage after the United States, roughly 30% lower than the country with the highest, France.In a graph showing citizens’ average purchasing power in the 35 member countries belonging to the OCED (Organisation for Economic Co-operation and Development), Japan ranked 22nd, three places below South Korea at 19th.According to OCED data, moreover, since the beginning of the 21st century, average wages in Japan have increased by only 0.4% — compared to 25.3% in the United States, 25.5% in Canada, 17.9% in Germany and 43.5% in South Korea.South Korea’s average wage eclipsed Japan’s in 2015, and the gap has continued to widen, with the difference as of last year the equivalent of $3,445 — about ¥379,000 or ¥31,600 on a monthly basis.Remuneration for managerial jobs in Japan is particularly low: When Diamond magazine and Mother’s Japan conducted a 15-nation comparison of wage levels in mid-2020 for rank-and-file workers, department heads, division heads and executives, it was found that for executives, Japan rated 30% lower than China, 20% lower than South Korea and several percentage points lower than the Philippines, Indonesia and Thailand.Tokyo’s reputation as an expensive city was debunked by Diamond’s comparisons of prices for various consumer items in the six cities of London, New York, Seoul, Shanghai, Singapore and Tokyo, according to a survey conducted in July of this year. At ¥127 for a 1.5-liter bottle of water, Tokyo ranked fourth; at ¥259 for a dozen medium-size eggs, fifth; at ¥380 for a tall-size cafe latte at Starbucks, sixth; at ¥995 for a Big Mac hamburger, fifth; at ¥8,201 for mid-range priced Nike running shoes, sixth; and at ¥995 for an evening meal at a medium-priced restaurant, fourth. Tokyo’s highest-ranked item was second place, at ¥420, for a starting taxi fare.Ryutaro Kono, chief economist at BNP Paribas Securities, told Diamond he believes Japan’s low ranking has come about largely as the result of polarization in the job sector.“Nonregular workers (part-timers and employees of worker dispatch firms) in the first quarter of 2021 made up 36.7% of all workers,” he says. “These workers have few opportunities to receive training either at the workplace or outside, so their productivity doesn’t increase. And less gets spent for their ‘off-the-job training.’“In other countries, salaries are tied to a job description, paying the same salaries for the same type of work. Japan has not adopted this system, so wages are not determined by the contents of a ‘job,’ but by the person who’s hired.”One reliable benchmark for wage earners’ disposable income are the surveys regularly conducted on kozukai, the pocket money doled out to male wage earners each month by their wives. This year, a survey by the PR Times organization found that in families with children, husbands received ¥30,338 per month — an increase of just ¥816 over a survey taken eight years ago by Shinsei Bank.The PR Times survey was also instructive in what husbands did to supplement their monthly allowances. For example, 41.4% of respondents said they moonlighted at a second job. Among the other replies: 25.2% asked their spouse for more money; 6.2% made revolving payments via credit card; 5.0% borrowed from their parents; 1.8% borrowed against future wages; and finally, 0.4% took out short-term loans from a sarakin (consumer finance company).Meanwhile, Spa (Aug. 31-Sept. 7) has saved the worst news for last. Empowered by a revision to the tax code from 2019 that targets “miscellaneous income,” the tax office is gearing up to pursue taxes on earnings in excess of ¥200,000 a year. Taxes will be levied not only on income from part-time jobs, but also sales of collectibles via flea markets, investments in common stocks, trading in cryptocurrencies and early cashing in of life insurance policies.According to business journalist Shinichiro Suda, the adoption of the compulsory “My Number” taxpayer ID system and standardization of electronic tax filing has closed most of the loopholes for avoiding taxes on discretionary income.Suda anticipates the average worker can expect a “big tax boost” after the coronavirus pandemic winds down.“There’s no mistake that a few years from now the Ministry of Finance will impose a tax increase, with the possibility of a 5% boost in the consumption tax (from its current 10% to 15%) for a limited period,” he predicts.With more stringent taxes on miscellaneous income and anticipation of a higher consumption tax rate, Spa foresees a “double punch” that will hit the wallets of already hard-pressed moonlighting workers even harder.Big in Japan is a weekly column that focuses on issues being discussed by domestic media organizations.

    source from The JapanTimes