A high-saving, educated workforce moving from farms to factories, and a growing consumer market, powered Japan's growth.
Japan had a well-educated and disciplined workforce. Almost all children finished school, and firms trained their workers further.
Workers moved from farms to factories and cities. In 1950 nearly half of Japanese workers were in farming, forestry or fishing. By 1980 only about one in ten were. Moving workers into industry raised output per worker sharply.
Japanese households saved a large share of their income, about a fifth by the mid-1970s. These savings, held in banks and the postal system, paid for industrial investment.
Rising wages created a mass consumer market. In the 1950s families bought televisions, washing machines and refrigerators. In the 1960s they bought cars, colour televisions and air conditioners. Demand at home helped firms grow before they exported.
Labour relations were mostly cooperative. From 1955 unions and employers bargained in the yearly "spring offensive" (shunto). It tied wage rises to growth and avoided long strikes.
- Farm workers
- Nearly half in 1950; about one in ten by 1980.
- Savings
- About a fifth of household income by the mid-1970s.
- Shunto
- Yearly wage talks from 1955.
Worked example: Explaining high savings
Why did Japanese households save so much?
- Limited welfare: families saved for old age and illness.
- Bonuses: lump-sum bonuses were often saved.
- Policy: tax breaks on savings, including postal savings.
- Result: cheap funds for industry.
Watch out for this
Japanese growth came from a unique national culture of hard work.
Attitudes mattered, but there were concrete causes: education, the move from farms to factories, high savings encouraged by policy, and rising demand.
Check your understanding
Why did moving workers from farms to factories raise growth?
- Factory workers produced much more per person than farm workers.
- Farms were closed by law.
- Factory workers were paid less.