By Dominic Carter
It’s not very often that anyone gets to say they’ve witnessed the dawn of a new era, but on May 1st this year, with the enthronement of a new Emperor, all of us in Japan rang in the age of Reiwa.
I renewed my driver’s license a few days later and was delighted to see that I had both been granted a five-year term and that the new era was clearly written on the card. But apart from a new name to put on a multitude of official documents, is it reasonable to expect any big changes?
Beautiful harmony to follow the lost decade
The name of the new era means ‘beautiful harmony,’ a clear statement of what the Imperial household and government of Japan are hoping for. A healthy dose of hope is certainly in order. The last era, Heisei, saw its early years marked by the so-called ‘lost decade’ of economic stagnation which started with the collapse of the famous asset price bubble in 1991. It’s hard to believe now, but there was serious talk towards the end of the Showa era (which preceded Heisei) of Japan trading places with the United States as the world’s largest economy. Instead, Heisei was a period of imposed modesty – of accepting economic limitations and making the country’s inevitable economic decline as orderly and as comfortable as possible. The general economic atmosphere was somewhat lugubrious and certainly not helped by two large-scale, tragic natural disasters, namely the Great Hanshin earthquake in 1995 that destroyed parts of Kobe and killed thousands, and the indescribable horrors of the 2011 Tohoku quake and tsunami that caused the Fukushima nuclear disaster.
Outperforming the Dankai and Baby Dankai
Every era has its own representative generation: In the Heisei years, it was the Baby Dankai who had just started out their lives – at a somewhat inopportune time. As the children of the Japanese Baby Boomers, too many of them spilled onto the job market at once, leaving many of them out of work or without ever finding stable employment. The prosperity of their parents, who profited full-fledge from the bubble and its excesses, seemed like it would be out of reach during their lifetime. And while their parents, also known as the Dankai in Japanese, lived through some remarkably prosperous times, in many cases they bought real estate during the bubble years, negative assets that never recovered and that they would be stuck with for life.
Generation Reiwa will have better lives than their parents
It is already looking quite possible that Generation Reiwa, those in their 20s now, will have better lives, more economic stability, and more money than their parents. Abenomics has arguably created a reversal of decades of economic downturn and, currently, only 2.5% of Japanese are unemployed. From the perspective of those looking for work, the job market is looking better than ever before. At the same time, Japan’s population is shrinking, and so is its workforce. The simple law of supply and demand places people that graduate from university now in an extremely attractive bargaining position. As the Japanese population dwindles, youngsters enjoy more scarcity value by the day. They are already able to negotiate better work conditions, like full-time employment with benefits, and higher salaries than those before them.
Japan’s population pyramid is not all doom-and-gloom
And, despite what many doom-and-gloom studies on Japan’s upside-down population pyramid want you to believe, the Japanese government is working on filling the gaping hole in the workforce, most recently with a new deal that facilitates the immigration of thousands of blue-collar workers from Asia. But it will be the native Generation Reiwa who can take their pick of the plumb roles. Comprising the shrinking pool of culturally and linguistically native Japanese, they will be the ‘cream of the crop’ for employers. Large companies such as Fast Retailing already fear the brain drain if they don’t offer packages and conditions that are acceptable for the new generation. Unlike their fathers, the Reiwas can choose to get up and leave.
Generation Reiwa is a unicorn
Generation Reiwa, as I named them here, is also known as yutori kyouiku in Japanese – or the liberal education generation. Roughly the equivalent of Generation Z in the West, they have enjoyed a much more lenient school system than their parents. Their seniors often lament this as having produced a generation that is weak, lazy and quick to throw the towel. Whether this is true or not, they don’t want to and, more importantly, don’t have to endure the often-grueling work conditions on a straight road to karoushi (death from overworking) that their seniors did.
The Reiwa will benefit from timing in two ways: the shrinking population works out in their favour, making them, in point of fact, the special unicorn that Gen Y & Z children in the West might have wished to be; while at the same time progress in economy, culture, and science promises better work conditions, better health, more wealth – all in all, simply a better life. Call them lazy or not, they will be able to decide what it is that they do and don’t want to do.
So what will Generation spend their happily-earned money on? For a start, while they are certain to have a healthy demand for consumption that elevates them and adds meaning to their lives, they are unlikely to be investing mindlessly in the totemic brands that entranced their Dankai grandparents. Their consumption will be grounded in a perspective that sets them apart from their hard-working Baby Dankai parents, who seem to have been hamster-wheeling with hopes to one day reach the level their own parents achieved.
Japan’s conservative youth
On the whole, while the climate for risk-taking might never have been better, it seems that Japan’s youth is rather conservative. Not outwardly materialistic, they are more about having stable jobs, finances, security and personal integrity than they are about freedom and experimentation. The stable employment most of them will be enjoying is going to allow them to invest in further education, travel and hobbies that will add meaning to their lives. In short, the experience economy is likely to be the big winner.
So, all in all, if you are Japanese university graduate under 30, Reiwa might indeed be beautiful!
As one of four Japanese societal macro trends monitored regularly by CarterJMRN (along with Women Power, the Changing World of Work, and Internationalization), Generational Dynamics impact consumer behavior across many age groups as attitudes toward work continue to evolve in relation to lifestyle, including availability and use of personal and leisure time.
We will continue to report on these macro trends on the Carter market research blog to help you unmask Japan.