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Japan and the Lost Generation's Looming Pension Crisis (2023)

The “employment ice age” that followed the collapse of the 1980s bubble condemned hundreds of thousands to low-paying temporary jobs and a meager pension to match. Who will sustain Japan’s Lost Generation as it enters retirement in the years ahead?

In Japan, the term Lost Generation refers to those who had the bad luck to graduate during the “employment ice age” of the 1990s and 2000s—after the collapse of the 1980s asset-price bubble—when companies sharply curtailed their annual recruitment of permanent employees. A general point to keep in mind when discussing this issue is that the public pension system is a form of social insurance, a mutual assistance program whose benefits are limited to paid members. But the idea was scrapped in the face of objections that providing equal benefits to contributors and noncontributors would be unfair to the former, and further, that the added costs of such a program would necessitate a hefty increase in the consumption tax.

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