Majority of Japan's middle class may have slipped into poverty

One of Japan's most fondly held self-images in recent years has been that it is an egalitarian nation where almost everybody belongs to an affluent middle class.

There is some discomfort, then, at recent assertions - backed by facts and figures - that this image is an illusion.

The prime minister's office carries out an annual survey of how Japanese view themselves. Last year, 89 percent described themselves as belonging to the ''middle class,'' compared with only 17 percent in 1958.

But a noted female economist, Masako Ozawa of the Long Term Credit Bank of Japan, set off shockwaves in March when she bluntly asserted that the whole idea is a myth. New spending patterns, she claimed, indicate that a significant new poor (''asset deprived'') working class is emerging in Japan.

Soon after Ms. Ozawa's findings were released, the private Hakuhodo Life Style Research Institute released a report also debunking the idea that most Japanese are affluent and providing further evidence of the reality of ''new Japanese poverty.''

Such assertions may be hard to accept for foreign visitors looking out from their luxury hotels on a skyline of futuristic skyscrapers, with shops aglitter with the most expensive products the world can devise.

But the fact that is many Japanese may have been living beyond their means for years in trying to keep up appearances as members of a prosperous middle class.

Ms. Ozawa used a wide range of government and private statistics to show that real disposable incomes (that is, after inflation) of Japanese families have barely grown in the past decade - and, in fact, actually declined in four of the past 10 years.

Instead of an egalitarian society, Ozawa asserts, Japan today is increasingly fragmented into various groups with widely differing economic prospects.

Farmers - who can sell off surplus land expensively in a country that never has enough available space and are protected by generous government subsidies and tax rebates - are now the genuine rich, she claims. Farming households enjoy three times the financial stability of ordinary working households, whose debts on average outweigh their assets.

Second, the gap between the take-home pay of company executives and the ordinary workers - after narrowing for the past 20 years - is widening again. Finally, government employees are paid much better than those in the private sector.

Ozawa's thesis was supported by the Hakuhodo Life Style Research Institute, whose chief researcher, Hiraku Hiyashi, categorized the Japanese public into four new classes: pretending rich, well-managed poor, new or quasi-poor, and the real poor.

The self-claimed or pretending rich, who are really upper-middle class, can afford to spend fairly luxuriously on designer-brand products and expensive imports. They constitute about one-third of all Japanese households, Hiyashi says.

The well-managed poor, about 8 percent, don't have much spare cash for discretionary spending without considerable belt-tightening. The new poor, about 53 percent of the public, are highly sensitive to fashion, good taste, and art and are attracted to quality goods, but they are always living on the edge of financial disaster.

The need-driven, true poor, who are forced to buy shoddy, bargain merchandise , represent the remaining 6 percent, Mr. Hayashi asserts.

An appreciation of these new class divisions could be of more than academic interest overseas - especially for American and European companies trying to gain a foothold in the intensely competitive consumer-products market here.

Recent consumer surveys, Ozawa and Hayashi point out, indicate that consumption of expensive products that have less added value is shrinking.

And contrary to the accepted belief that Japanese are most influenced by brand name, it is the generic products of acceptable quality that are attracting increasing numbers of cost-conscious shoppers at leading supermarkets.