Shinjuku, Tokyo. Photo: Joi (flickr)

Previously known for its economic egalitarianism, Japan is now experiencing a widening income gap. That’s because many workers are finding themselves without a steady job as Japanese companies are relying more and more on short-term labor contracts.

Market reforms in 2004 made it easier for companies to hire short-term workers in an attempt to make the Japanese economy more competitive. With these new policies, Japan may have unintentionally increased the very inequality that it’s prided itself on avoiding.

"In order to reduce costs, big companies increased their use of part-timers, as the cost of employing these temporary workers is roughly a quarter or less than regular workers,” Tadashi Nakamae, president of the Nakamae International Research Institute, told the Christian Science Monitor.

Income inequality rose twice as fast in Japan as in other rich countries between the mid-80s and 2000, according to the Organization of Economic Cooperation and Development (OECD).

The gap between rich and poor in Japan is wider than the OECD average. The OECD's 30 members include many of the world's leading economies, such as the USA, Germany, Japan, the United Kingdom, France and South Korea.
Similarly, Merrill Lynch Japan Securities found that the top 10% of Japanese male wage earners now earn 3.2 times what the bottom 10% make; the figure had been steady at around 2.6 times in the late '90s.

Though many see inequality as negative, some economists point out that reforms to reduce labor costs may be necessary to keep some companies afloat. Even still, In a country where 90 percent of the population has traditionally considered themselves to be middle class, this growing divide must be quite a shock to Japan’s egalitarian self-image.