hong kong jan 26 reuters breakingviews  japan’s gerontocracy faces a dilemma prime minister fumio kishida wants to shrink the country’s widening wealth gap but one big factor aggravating inequality is the decaying state of elderly people’s finances securing senior citizens’ votes is crucial to winning elections especially in japan yet the country’s combination of long lifespans relatively early retirement and no wage growth has been toxic for the young inequality in japan is not extraordinarily high but it has risen quickly and is now above the g7 average meanwhile the average japanese woman now lives 87 years six years longer than her american peers and over two decades more than the world average income falls sharply for most japanese when they retire these pensioners who make up nearly onethird of the population are heavily overrepresented on welfare rolls they drain healthcare and pension funds pushing government debt to twice economic output while inflation was tepid thenprime minister yoshihide suga and his predecessor shinzo abe tried to shave benefits at the margins to relieve the burden on young people in 2022 those with an annual income of at least 2 million yen 17533 will have to pay 20 of their medical expenses up from 10 some pension payouts have been cut slightly last year the cabinet passed a bill pushing companies to raise the retirement age to 70 from 65 enter kishida and his push to reduce inequality “new capitalism” is his slogan some investors fear that means a populist unwinding of market reforms his redistribution talk combined with his publicly expressed concerns about debt levels might imply a softening of costcontrol policies on elderly benefits paid for with tax hikes traders have coined a name for his statements “kishida shocks” despite this or because of it his approval rating has risen as in other countries workingage japanese have made big sacrifices to protect vulnerable older relatives from covid they have not been wellcompensated unemployment is low because the workforce is shrinking but like his predecessors kishida has yet to force executives to crank up salaries companies hoard cash even as inflation ticks up more retirement subsidies would reduce paper inequality but it would be akin to redistributing slices of a shrinking pie the best way to support elderly japanese folks is to help their hardworking children  masakazu tokura head of japans biggest business lobby said on jan 25 that companies must determine wages depending on their own situation rather than in a uniform manner as a prolonged covid19 pandemic has caused corporate profit to become uneven among sectors prime minister fumio kishida has pledged to stoke a virtuous cycle of wage growth higher household income and stronger economic recovery  japans factory activity grew at the fastest pace in four years in january as output growth picked up the au jibun bank flash japan manufacturing purchasing managers index reported on jan 24 but activity in the private sector as a whole slipped into contraction