Asia Economy

In fading Japan hinterland, skeptics doubt "Abenomics" will cure ills

Japanese Prime Minister Shinzo Abe
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Mihoko Asaka wants to know how candidates in this month's election in Japan will create jobs and halt the drastic population decline that is bleeding her home region of youth and vitality, but has little hope they will offer real solutions.

Like many of his age group, her 25-year-old son left the largely rural prefecture of Akita in northeastern Japan to find work after graduating from college.

"I'm interested to see how much they are listening to the voices from this region," said Asaka, 57, waiting for a bus in Akita City, the prefecture's capital. "But I don't think our voices are being heard. They talk about money being thrown around, but we can't see where it goes."

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Critics say Prime Minister Shinzo Abe's policies to end deflation and generate growth have helped mainly big cities, large companies and the rich by boosting share prices and exporters' profits with a hyper-easy monetary policy that has slashed the value of the yen and sent asset prices higher.

All too aware of the criticism, Abe has made spreading the benefits of his "Abenomics" agenda to "every nook and cranny" of Japan a key plank of his Liberal Democratic Party (LDP) platform for the Dec. 14 lower house election.

The LDP-led ruling coalition is expected to keep its lower house majority, so interest is focused on whether and to what extent its grip on two-thirds of the chamber erodes.

Akita prefecture, with the dubious distinction of having Japan's highest suicide rate and fastest-shrinking population, definitely needs a boost.

Already, about 30 percent of its population is aged 65 and over compared to 25 percent nationwide, with the ratio predicted to rise to more than 40 percent by 2040, when Akita's total population will have fallen by more than a third to 700,000.

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The prefecture has had scant success attracting new businesses. Average annual wages ranked 45th out of 47 prefectures in 2013, while Akita's minimum wage of 679 yen ($6) per hour lags far behind Tokyo's 888 yen.

"Abenomics isn't helping Akita," said a 65-year-old former banker who declined to give his name. "It just keeps sinking."

A little light?

Some local executives argue Abenomics is working, at least by beginning to alter the deflationary mindset that has kept Japanese companies in downsizing mode for two decades.

Akita's jobs-applicants ratio hit 0.93 in October, still way below Tokyo's 1.59 but a 22-year high for the prefecture.

"Before, things were completely dark. Now we can see a little light," Hiroki Miura, chairman of the Akita Chamber of Commerce and Industry, told Reuters, adding that sharp cuts in public works spending by the previous Democratic Party of Japan (DPJ) government had hit the local economy hard.

Some business leaders had hoped Abe's plan to legalize casinos could be a boost for the region but the outlook is murky after legislation died in parliament due to the election.

Florist Masanori Sato, head of a local shopowners association, said he'd felt a gradual improvement in business until a sales tax rise to 8 percent took effect in April. Abe has postponed a second sales tax hike to 10 percent for 18 months from a planned October 2015 start.

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"So far, Abenomics has mostly helped the center, but I feel as if it will start to spread after a while," he said in his tiny flower shop filled with Christmas decorations.

Like elsewhere in Japan, however, Akita wage increases have not kept pace with rising prices, and union officials said many of the new jobs on offer are for lower-paid temporary workers.

The LDP is traditionally strong in the region, but Abe's decision to call a snap poll after just two years in office is making it hard for the LDP to generate enthusiasm. Voter turnout could mark another record low, in Akita as well as nationwide.

No wings blowing

Last time, the wind blowing against the DPJ was very strong," said Yoichi Suzuki, vice-chairman of the LDP's Akita urban branch, referring to a voter backlash in 2012 against the then-ruling Democrats sometimes chaotic 2009-2012 reign.

"This time ... there is no wind at all."

Has Abenomics failed?

As elsewhere, voter disaffection could help the LDP, since it can still mobilize core supporters, although local politicians said LDP-friendly farmers are upset over falling rice prices and could turn to a rival conservative candidate in one of the prefecture's three election districts.

Civil servant Mihoko Iwasawa, 55, doesn't plan to vote.

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"I'll just keep quiet and hope the LDP wins," she said, chatting with a former classmate in a coffee shop.

While anti-Democrat anger may have waned a bit, it has far from evaporated.

"It's impossible to suddenly restore our image in this election," DPJ candidate Manabu Terata told Reuters. A 38-year-old former aide to DPJ premier Naoto Kan, Terata is bidding to regain his lower house seat.

Housewife Fumiko, 66, voted for the DPJ in 2009 but didn't cast a ballot three years later.

This time, she has yet to make up her mind. "There are a lot of people who can't vote for any party with confidence," she said, declining to give her family name. "I'm one of them."