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Friday, April 29, 2005


Japan, Germany face parallel challenges in era of change

They can learn from each other on how to tackle population aging, job losses, exodus of industries

Staff writer

See related story: Common projects could help ease frictions over history

Germany and Japan share a set of very similar economic challenges, including a rapidly aging population, and the two countries should closely follow and learn from each other's experience, a group of veteran journalists from Germany told a recent symposium in Tokyo.

News photo
German journalista (from left) Wolfgang Hirn, Kolja Rudzio, Sabine Muscat, Sven Hansen, and Clemens Wergin discuss Japan-related issues as Naoaki Okabe (right) from Nihon Keizai Shimbun listens at a symposium held April 15 at Keidanren Kaikan in Tokyo.

The symposium, held April 15 at Keidanren Kaikan, was organized by Keizai Koho Center under the theme, "Fate of Japan -- Prospect of Japanese Politics and Economy: View of German Journalists."

The journalists discussed Japan's economic prospects following a series of meetings with government officials, lawmakers, economists and journalists here.

Kolja Rudzio, an editorial writer for the economics section of Die Zeit weekly newspaper in Hamburg, observed that the current economic recovery in Japan -- despite signs of losing steam -- will be more sustainable than earlier short-lived turnarounds during the 1990s.

The current recovery is not driven by government pump-priming packages but is led by private-sector demands, and there are indications that the nation may finally be on the verge of pulling itself out of deflation, he said.

It is obvious that the current recovery will last longer, and there are good reasons for the confidence among Japanese businesspeople, politicians and bureaucrats, Rudzio told the audience.

However, Japan's longer-term growth prospect will inevitably be limited because of the rapidly aging population -- a problem that confronts not only Japan but most Western industrialized countries, including Germany, he noted.

Japan is a kind of a "social laboratory" on the problem of population aging, and how it deals with the issue is of great interest to outsiders, said Sven Hansen, editor of the Asia-Pacific desk at Die Tageszeitung newspaper. But at the same time, public consciousness of this problem does not yet seem to be strong in Japan, Hansen noted.

Japan is indeed advanced when it comes to taking care of the growing ranks of elderly population, he said. Measures have been taken to help elderly people find jobs, and Japanese firms are developing high-tech solutions -- building robots and other special appliances that cater to their needs, he said. The elderly segment of the population is in fact seen as a booming market here, he added.

On the other hand, Hansen noted, efforts to deal with the declining birthrate do not seem to be sufficient.

"It is striking that Japan can produce first-class robots but is not producing enough babies," he said.

Hansen asked if Japanese firms are making enough to help women pursue their career while raising children -- or to enable men to work fewer hours at the office and have more time with their kids.

A similar problem also exists in Germany, where legal steps and various incentives taken so far have not produced encouraging results, he said.

The journalists noted that industrial "hollowing out" continues to be a serious issue in Germany, whereas in Japan the fear of an exodus of its manufacturers to China appears to have receded as its trade with the giant neighbor increased to the point where China is now Japan's biggest trading partner, replacing the United States.

Everybody they met during their stay in Tokyo told them that Japan no longer considers China as a threat but as an opportunity, according to Rudzio of Die Zeit.

In Germany, one major topic of debate today centers on how to support lower-skilled workers who face wage cuts and loss of jobs due to increased competition with developing economies like China and East European countries, Rudzio said.

This does not seem to be debated much in Japan, where there is a much larger supply of jobs in the service sectors than in Germany, he added.

Wolfgang Hirn, reporter and editor with the Hamburg-based monthly Manager Magazin, said record unemployment in Germany -- with 5.2 million reported to be without jobs as of February -- can at least be partly blamed on the "offshoring" of German industries to East European countries as well as China and India.

Hirn cited the example of electronics giant Siemens, which had reduced its workforce in Germany by 35,000 in recent years while increasing the manpower in its China operations by nearly 30,000 over the same period. Automaker Volkswagen announced an investment of 5 billion euros ($6.5 billion) over the next year -- not in Germany, but in China, he said.

"One industry after another is disappearing in Germany -- textiles, shoes, toys, furnitures, electronics -- all of these industries are more or less gone. . . . I call this development de-industrialization," he told the audience.

And this will not remain a German phenomenon alone, he said, noting that China's advantage as a manufacturing base -- not only for its cheap labor but also an abundant supply of highly-skilled people -- is such that no industrialized country, not even Japan, will be an exception.

While many Japanese businesspeople say the exodus of industries to China has slowed, the issue will not be die out but will come back, Hirn said.

Naoaki Okabe, a senior executive officer and editorial page writer for Nihon Keizai Shimbun, noted that despite the earlier perception of China as an economic threat, Japan's current recovery is in fact being supported by Chinese demand. Unlike Germany, Japan has so far enjoyed more benefits than losses in dealing with China, he observed.

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