TT-555 -- Child Poverty in Japan, ebiz news from Japan

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A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, February 28, 2010 Issue No. 555


- What's new
- News
- Candidate roundup/Vacancies
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As the recession for the ordinary person in the street
bites harder, we know that there must be some in the
community who are really struggling to make ends met. Voice
of American ran a good story last week on increasing incidence
or child poverty in Japan. VoA interviewed a senior government
researcher who stated that up to 15% of Japanese children now
live in poverty.

The definition of "poverty" in Japan appears to be a
household where the breadwinner earns less than JPY2m
(US$18,000) a year. Certainly not a huge amount and definitely
not enough to feed, house, and educate a family with two
children. Yet in 2007 there were 10m households in Japan with
earnings at this level.

Perhaps even more surprising is that 4.3m households had
even less income -- earning less than JPY1m a year. True,
many of these stony-broke households were elderly people,
but nonetheless the researcher interviewed by VoA must have
been estimating roughly 2.25m children as being in families
under the poverty line, to arrive at her number. That's a
lot and no doubt some of them are members of the ultra
underprivileged families.

The researcher went on to say that Japan has the 4th
highest level of poverty in the OECD and that some of the
kids she sees turning up to school have not eaten
breakfast, bathe as seldom as once a week, and can't afford
to bring pencils to class. Quite an unbelievable situation.

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[...Article continues]

It is against this background then, that one sees that
despite the huge financial cost of the DPJ's increased
monthly child care allowances for young families --
something that will cost the nation about JPY2.3trn in
FY2010 and JPY5.3trn annually from 2011, it is nonetheless
an important investment if the country is to avoid all the
social ills that will otherwise arise as desperate children
grow into desperate adults.

A study done back in October 2009 by a Saitama teacher and
published by an academic print house found that there is a
direct correlation between childhood poverty and academic
and economic achievement. He comments that there is a
"chain of poverty running from the parents to the children".
In his study he divided Saitama schools into five
socio-economic grades, from G1 (highest) through G5
(lowest), and found that 47.5% of students in the G5
bracket had Dads who didn't have a regular job and thus no
regular income. Whereas for the G1 school students, just
12.7% of their Dads didn't have regular work. Similarly,
only 9.7% of G1 students lived in rented apartments,
whereas 41.6% of the G5's did.

Perhaps most tellingly, 40% of the G5 kids had no breakfast
at home, and 20% didn't eat dinner regularly either! What
they live on in between meals is anyone's guess.

Our take is that the cause for an increase in the number
of families living below the poverty line lies in several
different areas. Firstly it is quite obvious that anyone
working in the manufacturing sector at present will have
been hard hit by the recession -- either getting laid off
or at least having a cut in salary. The government itself
is forecasting that the nation's nominal total employee
payroll in FY2009 ending March 2010 will be around
JPY252trn, a 3.9% drop over FY2008. Put another way, there
is JPY10trn less in disposable income by those families'
income earners.

The other big reason is the number of single-parent
families with one or more children aged 18 or less, which
is now around 100,000 families. These single parents are
poor not because of unmarried births (abortion on demand
is commonly practiced), but because of the high divorce
rate. Because there is no concept of legally binding joint
custody in Japan, due to the archaic system of having to
associate a child with just one family register, there is
little incentive for divorced fathers to help out with
child maintenance. Even if a court awards maintenance, if
the Dad isn't seeing his kids it's a case of out of sight,
out of mind, and there is no enforcement by the courts.

This situation needs to change, but we don't think it will
be any time soon -- due to the entrenched nature of the
legal system and the values of the judges who inhabit those

Thankfully, the DPJ came to the rescue of such families in
October of last year, after the LDP mean-spiritedly cut
child subsidies for all single-parent families unless the
parent was working (in which case they got a princely
JPY10,000 per month). Too bad for the 20% of single moms
who were sick, disabled, or simply couldn't find work or
an available day care center. Anyway, the DPJ allocated
JPY5.8bn starting December 2009, to provide single-parent
families with an additional JPY20,000/month for the first
child and JPY1,000 for each following child.

Child poverty is just one more reason to wonder why it is
that the nation spends so little time looking after its
future generations and so much time pandering to the ones
who can't do much more than vote from their hospital beds.


Lastly, several readers have commented on the ad we're
running for the Metropolis investor isurvey. What is it?
Well Metropolis is getting ready to make a significant
expansion into online media and web tools, as well as some
tie-ups with other Japanese companies -- all of which will
be announced over the next few months.

Given that this is such a difficult economic environment in
which to raise equity from conventional VCs and angels,
Metropolis' management felt it would be interesting to see
if the readers of Terrie's Take and its other related media
might be interested to become small-lot investors. The
survey is the company's first (and non-binding) step
towards creating a more diverse investor base. To see
whether you have the right profile and experience to be
investing into a company like Metropolis, send email to

...The information janitors/


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wish to participate in this survey, please contact
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+++ NEWS

- Lower company taxes?
- Willcom rescue deal may be off
- Economic data shows slight recovery
- Goldman analyst reckons Japan next big risk threat
- New drug effective against bird flu

-> Lower company taxes?

The DPJ ruling party is saying that it plans to cut company
taxes. Although we'll believe it when we see it, the
Cabinet Office Senior Vice Minister, Motohisa Furukawa, is
saying that the tax rate needs to be cut so as to preserve
the health of Japanese firms. Rumor has it that the
government is planning to cut the rate for small- to
medium-sized companies from 18% to 11%. At the same time,
it looks like the tax rate for large companies might stay
at 30%. ***Ed: Always gotta laugh at these tax rates,
because they're so misleading. You still need to add in the
local government taxes of 10% and the social welfare "tax"
of 16.5% on every employee's salary.** (Source: TT
commentary from, Feb 27, 2010)

-> Willcom rescue deal may be off

Bickering between the two co-sponsors supposed to rescue
failed telco Willcom has caused the Enterprise Turnaround
Initiative Corp. of Japan (ETIC) to warn both parties that
it may not facilitate the deal if they don't come to a
decision on capital allocation and other issues soon. The
two parties are Softbank (we thought they didn't have any
spare cash...?!) and Private Equity fund Advantage
Partners. (Source: TT commentary from, Feb 27,

-> Economic data shows slight recovery

Mixed economic signs may be pointing to better days ahead.
Industrial production was up 2.5% in January 2010, the 11th
straight month of improvement, and retail spending in
January was also up, by 2.6% over the same month in 2009.
But while consumption is up, at the same time deflation
continues, albeit in Tokyo it's slowing down. Tokyo's CPI
fell by 1.8% in January, after falling by 2% in December.
(Source: TT commentary from, Feb 25, 2010)

-> Goldman analyst reckons Japan next big risk threat

What's your pick of the next country to cause a major
financial panic? Greece? Spain? Iceland? No, according to
the chief global economist for investment house Goldman
Sachs, Japan is the biggest risk for a “serious” economic
melt-down in the G10. The economist points to consumers
running out of savings and of course the huge government
debt. Net assets held by Japanese households dropped to
JPY1,065trn yen (US$11.9trn) as of September 2009, 3.3%
less than FY2008 and 10.7% less than a decade earlier.
(Source: TT commentary from, Feb 26,

-> New drug effective against bird flu

Researchers at Tokyo University have developed a new drug
effective in mice tests against the H5N1 bird flu, as well
as other strains which are resistant to Tamiflu. The team
found that the drug is effective in 70%-90% of cases where
mice have been infected with the flu. The drug will be
marketed by Daiichi Sankyo and it says that this is the
first drug to be developed in Japan from scratch. It should
be on the market by early 2011. (Source: TT commentary from, Feb 25, 2010)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

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