As entrances go, Misao Sato’s is as inconspicuous as they come. After he walks unannounced on to the shop floor at his company’s headquarters near Tokyo Bay, there is no standing on ceremony, no greetings yelled above the din of the machinery. Employees in blue overalls simply acknowledge the arrival of the president of the Kikanshi printing company with a nod and a smile, and return to work.

Founded a year after the end of the second world war, Kikanshi has grown from producing political pamphlets to a multi-million pound business, with newspapers that reach a readership of more than a million. At lunchtime, however, Sato quietly takes a seat alongside his employees in the staff canteen; this evening, he will squeeze on to a packed train for the journey back to the modest home he shares with his wife in the commuter belt north of Tokyo.

Sato wouldn’t have it any other way. Having joined Kikanshi straight from high school at the age of 18, he epitomises Japan’s “modest” business executives. “My door is literally open all of the time,” the 60-year-old says. “The management and staff work very closely together. We decide what to do as a group; we don’t like doing things in a top-down style. We’re not that kind of company.”

Sato’s pay packet suggests the company’s evenhanded approach runs deeper than mere gestures. Despite his decades of service, he earns just over twice the average monthly salary of his 150 full-time staff, and only 1.2 times that of his highest-earning employees. “In fact,” he says with a smile, “if you factor in overtime, there are people here who take home more than I do.”

The egalitarian ethic runs deep in Japanese corporate culture, with CEO pay much lower than in the US and UK. Photograph: Manish Swarup/AP

Sato may be an extreme example, but studies show the same egalitarian ethic runs deep in Japanese corporate culture. According to a recent survey of global wealth by Credit Suisse, Japan is the most equal major economy in the world in terms of wealth distribution – with Russia the most unequal.

“Together with Japan’s high average wealth, this relative equality means few adults have assets below US $10,000 [£7,800],” the report stated. “The proportion of the population with wealth above US $100,000 is seven times the global average.”

In addition, the median salary of chief executives at Japanese firms with revenues of more than 1 trillion yen (£7.1bn) is one-tenth that of American CEOs, and less than one-fifth that of their counterparts in Britain, according to research by the advisory company Towers Watson. Most CEOs of firms listed on Japan’s Nikkei 225 stock average earn less than 100 million yen (£715,000) a year.

Unassuming boss Misao Sato (right)

Japan’s performance in wealth distribution is more remarkable given the size of its population. While Scandinavian countries are regularly held up as models of egalitarianism, they have far fewer people to worry about. Japan’s population of 127 million, though predicted to shrink dramatically in the coming decades, dwarfs that of Sweden’s 9.6 million and Norway’s 5.08 million.

The postwar rise in living standards brought other benefits: universal health insurance and health outcomes that are among the best in the world, and an enviable life expectancy of 87 years for women and 80 for men. Infant mortality is among the lowest in the world. And while the country fares poorly in international comparisons of English-language ability, Japanese children lead the world in literacy and numeracy.

And yet, at a time when leading economists and epidemiologists alike are hailing the importance of tackling inequality across the world, the edifice of Japanese-style egalitarianism is beginning to crumble.

Rapid depopulation, coupled with a rise in the number of people aged 65 or over, have presented recent governments with a policy conundrum they have yet to solve: how a shrinking workforce can meet a national bill for social security and healthcare that is expected to balloon in the coming decades.

Meanwhile, large sections of Japan’s young are rejecting the traditional “safe but stifling” corporate path their parents and grandparents accepted without a murmur, in favour of gig economy jobs that offer more freedom – but much less security. Have they decided that Japan’s vision of an equal society is not all it’s cracked up to be?

When the bubble burst



The roots of Japan’s record on wealth distribution lie in national humiliation. To turn a crushing wartime defeat into economic success, postwar governments struck a deal with a war-weary population that would serve both parties well for the best part of half a century: hard work and self-sacrifice would be rewarded with a job for life, incremental salary rises, bonuses and seniority-based promotions.

The quid pro quo worked seamlessly until Japan’s asset-inflated bubble burst in the early 1990s, ushering in a period of stagnation that, a quarter of a century on, continues to haunt the world’s third-biggest economy. Having powered Japan through its period of breakneck economic development, the dutiful “salaryman” suddenly became dispensable.

Japan’s new work-life balance scheme demands staff be let off at 3pm on the last Friday of each month. Photograph: Aluxum/Getty Images

Under the guise of corporate restructuring – risutora – middle-aged employees considered surplus to requirements were superannuated in an unprecedented breach of the postwar employment deal. Joblessness rose to almost 6% and the suicide rate topped 30,000 a year – one of the highest in the world.

Yet even Japan’s worst downturns have been free of the social unrest, mass unemployment and knee-jerk austerity that created deep social fissures in countries like Britain. In 2009, at the height of the country’s worst economic performance since the war, some commentators compared the low crime rates and high level of social cohesion in Japan with the glaring inequalities in the west, and wondered if it was appropriate to talk about a Japanese recession at all.

Violent crime is a rarity on the streets of major cities here, and on any given Friday evening, restaurants and bars are crammed with well-dressed office workers. Even during the post-bubble era of restructuring layoffs, unemployment stayed comparatively low: in February this year, it was at its lowest level for more than two decades, at 2.8%.

But the concept of lifetime corporate employment is fading fast. In shunning – or having being denied – the same opportunity to step on to the career escalator, millennials and women (who accounted for 68% of non-regular workers in 2015) are now filling part-time or temporary jobs across a host of sectors that have one thing in common: pay levels far below those of full-time employees.

According to the latest OECD study of Japan’s economy, after adjusting for type of job and educational attainment, the wage gap between full- and part-time workers is 45% for men and 31% for women. Single-income households are seven times more likely to be in poverty if the breadwinner – usually the husband - is a non-regular employee. Yet while the low pay and poor conditions offered by the non-regular job market are hardly attractive options for anyone, more and more salaried workers are still seeking ways to break free of Japan’s corporate shackles.

Death from overwork



Arguably the most important domestic news story of the past year was a labour standards office ruling that the suicide of Matsuri Takahashi, a 24-year-old employee of the advertising giant Dentsu, was due to karoshi, or death from overwork. In the period leading up to her death, Takahashi had been working 105 hours’ overtime a month.



Dentsu was not alone in wringing every last drop from its employees. In the wake of the labour office’s ruling, Japanese media ran editorials decrying companies for placing profits above the health and wellbeing of their employees.

Dead tired: a recent report says one in five Japanese workers is at risk of death from overwork. Photograph: Alamy

In its first white paper on karoshi published last year, the government confirmed the growing human toll exacted by the prevailing work culture of devotion and self-sacrifice, warning that one in five Japanese workers was now at risk of death from overwork. The report added that approximately 21.3% of Japanese employees work an average of 49 or more hours each week, well above the 16.4% reported in the US, 12.5 % in Britain and 10.4% in France.

Compelled to take action by the public outcry that followed Takahashi’s death, the government is now poised to introduce a cap on overtime at 100 hours a month – a limit some critics believe will do little to address the problem.



In the postwar era, union members rising through the ranks to take management jobs helped ensure wealth was more evenly distributed throughout Japan. But in return, employees became the properties of their companies – to be moved, given pay cuts during lean times and, as the karoshi problem proves, made to work punishingly long hours. These days, the expectation of a gently upwards career trajectory and a decent standard of living in retirement is often not enough reward for such sacrifices.

The government is poised to introduce a cap on overtime at 100 hours a month

Like many salarymen in their 40s, Hiroyuki Ito was destined to see out his working days at the company he joined as a graduate when, two years ago, he suddenly walked away from his job as a sales rep for a major food manufacturer.

“I had reached the point where I knew I didn’t want to spend my entire career there, but I was so busy that I could never find the time to think about what else I could do,” says Ito. “So I took a gamble and quit before I had found another job.”

The 47-year-old took a six-month break to travel and spend more time at home with his wife and three children before working, for no pay, for a consultancy startup where he is now a full-time sales employee. “I had to make a decision: would I give myself completely to my old company and let them decide my future, or take a chance and decide for myself?

“In Japan, if you go to a good university and land a job at a prestigious company, you tend to think that you’ve made a success of your life. But I had this nagging thought that for all the stability, I wasn’t doing something I genuinely enjoyed. I have far less money now, but at the same time my life is completely free of stress.”

The issue of overworked employees caused a media storm in Japan. Photograph: Alamy

Ito completed his transformation after attending a retraining course at the Institute of Social Human Capital in Tokyo, where about 150 discontented employees – two-thirds of them men – come to pursue the professional dreams denied to them in their former jobs.

“By the time a staff employee is their late 50s they have become experts at one thing but don’t know much about anything else, and then suddenly they are 60, on a reduced salary and staring retirement in the face,” says Matsuhiko Ozawa, who opened the institute four years ago after quitting his job as an advertising executive in his 40s. “It can be incredibly stressful.”

The school adopts an unorthodox approach to reprogramming men and women more attuned to the hierarchy-based conventions of company life. In one exercise, small groups of students eat lunch together while blindfolded – a handicap Ozawa says encourages them to communicate using their four remaining senses. Business cards are banned, and students are given nicknames in an attempt to wean them off corporate rituals they once used to quickly establish the professional pecking order.

Given Japan’s extraordinary longevity statistics, Ozawa believes employees approaching the twilight of their careers should instead be preparing for a second career. “Our task is to stop them before they reach the point where they have lost the will to do something new, and help them work out what they’re going to do with the rest of their lives,” he says.

“If you retire from a company at 60, you could easily have 30 years of life left. People are beginning to ask: what can I do to make those years enjoyable and productive? The cost of living is high, particularly in Tokyo. Most of the people I meet here can’t afford to sit around doing nothing.”

Walking a tightrope



Teruko Watanabe sips from a glass of iced tea at a western Tokyo diner and laughs at the idea that, at 57, she is ready for a career change.

As one of the growing number of workers on temporary contracts hired to fill openings at everything from convenience stores and restaurants to auto plants and offices, she represents the new – and troubled – face of Japan’s labour market demographic.

“The reason I’ve never been offered a staff job is that I and other temporary workers are dispensable,” says Watanabe, who has worked, one three-month contract at a time, for the same energy company for 18 years. “We are the buffer between companies and tough economic times.”

A soup kitchen set up for local homeless people in ‘Square Park’, Osaka. Photograph: David Levene/The Guardian

Her two adult children have left home but she must now juggle work with looking after her 87-year-old mother, who suffers from dementia. Their home in western Tokyo is paid for, but food and utility bills, commuting expenses and the costs associated with caring for her mother mean Watanabe has little left over from her monthly salary of just over 200,000 yen (£1,430) a month. “I just about get by,” she says, “But in a way I am lucky. There are lots of other temporary workers who are far worse off than me.”

Regarded as a source of cheap labour during the economic slump of the early 2000s, contract and other non-regular workers now comprise about 40% of Japan’s workforce. Their wages, particularly among younger people, are well below those of full-time staff – creating a two-tiered labour market that experts say is contributing to rising levels of poverty in one of the world’s wealthiest countries.



An estimated 3.5 million Japanese children – one in six of those aged up to 17 – are from households classed as experiencing “relative poverty” (defined by the OECD as those with incomes at or below half the median national disposable income). Japan’s relative rate of poverty has risen over the past three decades to 16.3%, while the rate in the US, though still higher at 17.3%, has fallen.

“Perhaps some people envy me for being a free agent,” Watanabe says. “But while temp workers like me have fewer responsibilities, we have absolutely no security.”

Japan’s prime minister, Shinzo Abe, has promised to do more to narrow the gap in pay and benefits between regular and contract employees, in an attempt to raise productivity and consumer spending. But companies have so far failed to heed his calls for significant pay rises.

As she contemplates retirement on a basic state pension, and with next to no savings, Watanabe bristles at the suggestion that Japan has anything to teach the rest of the world about equality.

“I feel like I’m walking a tightrope,” she says. “If become ill or lose my job for some other reason, I’ll fall off straight away. And there will be no safety net to catch me.”

Over the coming year, the Guardian’s Inequality Project will shed new light on issues of inequality and social unfairness around the world. Read all of our coverage here. To get in touch, email us at inequality.project@theguardian.com.