causes of poverty in japan

Are Japanese rich? If the income is so high, why are there still so many poor people

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Are Americans rich? If the per capita income in United States is so high, why are there still so many poor people? This is because there has never been a “per capita” income. How can the income of the rich and poor average it.

Are the Japanese rich or not?

Let’s look at two figures.

  1. Japan’s GDP per capita is $33,900 in 2021 and ranking 27th in the world.

  2. The annual income per capita of all workers in Japan is $31,960 in 2021.

Japan is an affluent society from the above two figures. Another characteristic of Japanese society is that it is a relatively “society of equal wealth”.

The salary is similar whether a college student joins a Fortune 500 company or an SME. The salary ranges from $1400 to $1600 depending on the regions in the begining.

The salary rate of civil servants is set at a relative average between large companies and small and medium-sized enterprises. The salary status of national civil servants in 2022 announced by the National Personnel Authority says that the salary plus bonus will result in an average annual income of $51000.

income inequality in japan statistics

The core of the country’s wealth distribution framework is that “wealth does not extend beyond three generations.” A parent who buys a home for a child pays a 45% gift tax on the property. Children who inherit from their parents have to pay up to 45% inheritance tax. A person earning $75,000 a year will actually receive only about $52,700 after deducting various taxes and fees. 

The government allows the money of the rich to be distributed to the poor through a strict tax system. For example, low-income families with annual income of $19500 identify as poor families which can receive a special living allowance from the government. Children go to college for free and will receive a monthly living allowance.

It seems that Japanese people can achieve no shortage of money in everyone’s pocket from the above data. What is the truth?

According to a report of the “Single Life Survey” published by Gibraltar Life Insurance Company in Japan on December 22, the company found that 23.1% of 4,700 unmarried men and women aged 20-69 nationwide had no savings. This means that one out of four Japanese singles live from paycheck to paycheck.

This survey report also shows that 13.7% of those who saved less than $3700. Those with $7500-$15000 were 13.8%. 37000-65000 were 11.2%. The average amount of savings is $52,000. 

According to the report of the “National Living Basis Survey” conducted by the Ministry of Health, Labour and Welfare of Japan, the proportion of “low-income households” with an annual income of less than $22000 in 2021. It took 32.9%.  In other words, one-third of the country’s households belong to “poor households”.

wealth inequality in japan

Why are there so many “poor” people in Japan with such high incomes?

A very major reason, lies in the price of goods. High-income society is a high-price society either. In other words, you are rich if you earn Japanese money and spending in developing countries. However, if you live in Japan, you are poor.

Some elderly Japanese people take their pensions and run to Malaysia to live. You can rent a very nice house with $500 rent monthly and you can often go for a drink. 

Another reason is that Japanese people seldom have passive income and the urge to invest money to make money. Government agencies and institutions and most companies still prohibit their employees from having other jobs. most Japanese people’s salary income is their entire income.

Anyway, 2023 is a wonderful year to look forward in the future.

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