Image Credits: CNBC
Japan’s “lost generation,” primarily consisting of individuals in their 40s and early 50s, continues to face significant economic challenges. This cohort, which entered the job market during the late 1990s and early 2000s—a period marked by economic stagnation following the collapse of the 1980s asset bubble—struggles with stagnant wages and limited career advancement compared to both older and younger workers.
Despite an overall rise in wages in Japan since early 2022, data reveals stark disparities between age groups. While employees in their 20s and 30s have seen their monthly pay increase by over 10,000 yen ($65) over the past decade, those in their late 40s have experienced only a marginal rise of about 1,000 yen, and workers in their early 50s have seen a decline in their earnings.
The employment ice age created a tough environment for young people during this period. Many who managed to secure jobs found it difficult to climb the career ladder, as older employees, hired during the economic boom, were entrenched in their positions. This situation has been compounded by rising retirement ages, further limiting opportunities for advancement among the lost generation.
A decade of data shows a decline in the proportion of workers in their early 50s holding senior management roles, while the share of such positions held by younger workers has increased. Many from the lost generation also have limited work experience, restricting their ability to switch careers and potentially increasing their vulnerability in a changing job market.
The reluctance of businesses to raise pay for these employees, due in part to assumptions about their job stability, exacerbates the issue. Moreover, many from this generation have struggled to build financial assets, with a growing percentage of those in their 40s having less than 1 million yen in savings.
As traditional job benefits like lifetime employment become less common, those from the lost generation face challenges in adapting to digital and advanced office tasks. This economic strain impacts their ability to save for retirement and contributes to a broader imbalance in Japan’s social welfare system. Additionally, economic constraints have led to lower marriage rates among this group, potentially increasing risks of isolation and health issues in later years.
Given that this generation makes up about 20% of Japan’s population, addressing these issues is crucial for both individual well-being and the broader economy.