Japan's Economy Suffers As Exports Go Unsold

As the U.S. economy slumps, Japan's economy is also sinking. Consumers everywhere have stopped buying Japan's cars, electronics and other exports. The Japanese still remember the long recession of the 1990s. Reporter Lucy Craft tells Linda Wertheimer this slump may be more painful.

LINDA WERTHEIMER, host:

As the US economy slumps, the big economy on the other side of the globe is also sinking. Japan's economy is suffering as consumers here and elsewhere stop buying that country's cars and electronics and other exports. Japanese people there still remember the long recession of the 1990s, but this slump may be even more painful. We called reporter Lucy Craft in Tokyo to find out more. Lucy, welcome to the program.

Ms. LUCY CRAFT (Freelance Reporter): Hi, there.

WERTHEIMER: Can you see the economic slump when you're walking around the streets of Tokyo?

Ms. CRAFT: That's one of the things that people always say about Japan, even when things are terrible, even when the economy is in the toilet as it is right now, you don't see so many manifestations of it on the street. However, anyone who turns on his or her TV every single night is seeing one pitiful story after another of one of the tens of thousands of people who are getting laid off.

WERTHEIMER: Now, Japan used to be a place where, compared to the United States, it was much harder - legally and, in fact, socially - to lay off workers. Companies froze wages and hiring. They cut costs every way they could. They tried everything but layoffs. This was the land of lifetime employment. What has changed?

Ms. CRAFT: Well, we had a prime minister named Koizumi who was very close to the United States and under heavy criticism from the US that Japan's labor practices were too inflexible. Now anyone who wants to hire someone in what used to be a fulltime position, now they can hire temporary workers for almost anything. And so companies, to save costs and to become globally competitive, started hiring them by the tens of thousands, to the point where Japan had the largest percentage of part-time workers as a percentage of its total work force in the industrialized world.

WERTHEIMER: And are those the people being laid off?

Ms. CRAFT: Exactly. Here and there, you see companies starting to cut away at the full timers, but it's mostly the part-timers who are getting the axe right now.

WERTHEIMER: Is there a stigma for these people, being out of work?

Ms. CRAFT: If you work in this country, that's which you're supposed to do. Japan has always prided itself on being a very hard-working country. If you don't have work, in many instances, people will do almost anything to pretend that they're still working. You see a lot of people dressing up and going and sitting in the park all day long rather than have their neighbors find out that they don't have a job anymore.

WERTHEIMER: What all these unemployed people doing? You said that you don't see them on the streets of Tokyo, but where is that anger going?

Ms. CRAFT: Well, Japanese people don't tend to take to the streets like you would see in the US. Where they're gathering is they're ending up with the unemployment offices. The government, to sort sugarcoat the names of unemployment offices, call them Hello Work offices. So that's where all the unemployed people are going. We have the deliberations of the national parliament on TV every day, and every day the opposition parties are beating up on ruling party for letting this catastrophe to happen. Of course, it wasn't all the government's fault that the financial crisis occurred.

But, at any rate, this is giving a lot of ballast to the opposition party, and there's a lot of speculation that the government - the ruling party which has been in power pretty much non-stop since after World War II - will be thrown out of office in a few months when elections are held.

WERTHEIMER: Lucy Craft, thank you very much.

Ms. CRAFT: Thank you.

WERTHEIMER: Lucy Craft is a freelance reporter based in Tokyo.

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