Cheap drugs and sex have boosted sections of Japan's shadow economy despite the recession here, but as the price of illicit pleasure drops, the industry has become more dangerous, experts said.
"There is a general expansion in revenue generated by organized crimes as well as the sex industry," said Takashi Kadokura, an economist at Dai-Ichi Life Research Institute who has studied Japan's underground economy.
"The key word to explain this expansion would be low price. Because of the low price many customers are attracted to go into this market and therefore the market in general has expanded," he said at the Foreign Correspondents' Club of Japan.
Japan's shadow economy comprised 4.9 percent of GDP or ?25.1 trillion (US$189 billion) in 2000, down from a peak of 7.6 percent in 1990, because tax evasion, which accounts for over 80 percent of the total, dropped after the economic bubble of the late 1980s burst, he explained.
In sharp contrast, illegal funds generated by Japan's yakuza gangsters rose from around ?820 billion in 1990 to ?1.9 trillion in 1999, the latest figure available.
"Most of the illegal revenue comes from the increased drug trade," said Kadokura who recently published a book titled White Paper on Japan's Underground Economy.
Cash generated through racketeering or betting has dropped following the promulgation of a law in 1992 to regulate the industry, but a rise in drugs smuggled into Japan from China has created a new source of income.
Stimulants which once cost several hundred thousand yen now fetch around ?10,000 on the street, cheap enough for junior and senior high school students to buy.
"That is why although the price has gone down there has been an explosion of new users so the yakuza are able to generate profits," Kadokura said.
Certain areas in the entertainment business have also enjoyed a boost.
Sex industry sales have risen as a proliferation of cheap massage parlors and low-budget prostitution services become more popular.
Revenue generated by the industry grew to ?1.7 trillion in 2000 from ?1 trillion in 1990, according the the economist's calculations.
There are no official data on the sex industry so Kadokura compiled his own numbers by ringing parlors listed in entertainment magazines. He found out the waiting time for clients and was able to calculate the revenue generated at a single shop. He then multiplied this figure by the total number of outlets.
Leading the rise in sales are massage parlors, where customers can enjoy a quick thrill for ?10,000, significantly less than the ?60,000 bill charged for traditional house prostitution.
But as Japan sinks deeper into recession people have become more desperate and the underground industry is getting dirtier.
Women unable to find work are being forced into prostitution and as the price drops they must have sex more often to make ends meet.
"I would think it is more dangerous [now]. For example, among the Japanese high-school girls there is this phenomenon of enjokosai, non-professional prostitution for money.
"In this field also the unit price is coming down and so to maintain the same level of income you have to increase the frequency ... so morally speaking it is not something good," said Kadokura.
Though the seedier end of Japan's sex industry has slashed prices to generate business, high-class hostess bars continue to prosper as affluent businessmen still want to celebrate their success.
Rie Hara is a "Mama" or marketing manager at one of the most exclusive hostess bars in Ginza, a stylish sector of Tokyo.
She started out as a hostess 15 years ago and gradually worked her way up through the industry.
The money is not as forthcoming as it was during the bubble years but Hara still charges first time customers a minimum of ?80,000 to enter her club for the night.
Unlike the many sex parlors and massage salons nationwide, traditional hostess bars simply provide women dressed in kimonos to pour drinks for their male clients and talk to them.
"The clubs in Ginza represent a very unique culture of Japan. There is nothing tangible nothing that you can really touch that we can provide but I think we are providing a place of relaxation a place of comfort and also clubs are a place where you can pursue the traditional stylishness of Japan," said Hara.
But even old school hostesses are feeling the pinch. Certain girls once earned ?80 million a year, but this is unheard of now, Hara said.
Similarly, club managers force their staff to bring customers to the club themselves or forfeit their salary, or they reduce the hours the girls work.
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