Chapter 2 - The Labor Markets
Chapter 2 - The Labor Markets
1
Japan's Population
Between November 1945 (immediately after the end of World War II) and 1999, Japan's population increased by a factor of 1.74, from 72.15 million to 126.69 million. Higher postwar birth rates and lower death rates stimulated this exceptional increase, which occurred over only a half-century. During the first baby boom (1946), the population grew at an annual rate of 5%, but growth leveled off to 1% per year in the subsequent 10 years. The second baby boom occurred in the early 1970's, causing the rate of population growth to rise again until it once again reverted to 1% growth per year, and then began a steady decline. There were many reasons for the changes in population growth, among which was the abandonment of farming villages for urban life. In the cities, the norm became nuclear families headed by company employees (who produced fewer offspring), which supplanted extended families. This transition was also marked by the tendency to postpone marriage and child-bearing until a higher average age. The wider availability of postgraduate education, more opportunities for women in the job market, and higher employment rates were also contributing factors. The latest forecasts predict that Japan's population will peak in 2007 at 127.78 million, and then begin to decline for the first time in history (Figure 7). Demographic changes will also become more pronounced, as birth rates fall and the elderly population increases. The working population is already diminishing in both real and proportional terms. As a result, economic growth is slowing, and the burden of supporting the younger and older segments of society is becoming a serious problem. As the labor force ages, we have observed a decrease in the number of young workers, and in overall manpower as well. Figure 9 shows population shifts between three major urban areas and other areas of Japan over the years.
One striking pattern is the shift from rural areas to major cities during the period of high economic growth in the 1950's and 1960's. With the exception of the eldest sons of families engaged in agriculture, people moved from farming areas (where employment opportunities were limited) to cities, where they could easily find work in the rapidly developing secondary and tertiary industrial sectors. The results of this shift were a depletion of the population in the countryside, and overcrowding in urban centers. A subsequent shift saw a migration from congested cities to the suburbs. Geographic shifts in population finally began to subside with the 1973 oil crisis and the subsequent tapering off of economic growth. There are many difficulties associated with the heavy concentration of population in the Greater Tokyo area, as opposed to other urban centers. Also noteworthy (though not so much in terms of absolute population) is the tendency for people to move from their birthplaces in the countryside to an urban center, and later back to their hometowns or a city near their hometowns. With the globalization of the economy, the foreign population in Japan is also increasing. In the past, North and South Koreans accounted for the majority of Japan's resident aliens. Today they represent only a little more than 40% of that population (Table 4, Figure 9). However, there has been an influx of Chinese and other Asians, and of Central and South Americans of Japanese descent who have come to Japan seeking employment, and who hold permanent-resident visas. This trend has been increasing since the days of the bubble economy in the 1980's. The influx from Brazil began to subside in 1998, but that from Peru continues to grow. The number of registered aliens has increased steadily as well, reaching 1.512 million in 1998. Nevertheless, foreign residents account for only 1.2% of the total population.
11
Figure 7: Projected Population Shifts (Unit: 10,000 persons)
Medium growth rate from previous projection High growth rate Medium growth rate Low growth rate Low growth rate from previous projection
Actual figures
(Fiscal year) Note: We have provided three types of population growth (low, medium, and high), based on differences in birth-rate projections. Source: Population Projections for Japan, National Institute of Population and Social Security Research (January 1997)
Figure 8: Movement of Population Between or Within Large Urban Centers
(Unit: 10,000 persons)
;;;;;;;;;;;;;; ;;;;;;;;;;;;;; From non-urban areas ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; to urban centers ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; ;;;;;;;;;;;;;;
;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;; Within urban centers ;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;
;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; Within non-urban areas ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;; From urban centers to ;;;;;;;;;;;;;;;; non-urban areas ;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;; (Fiscal year) Note: "Urban centers" includes the Tokyo, Osaka-Kobe, and Nagoya metropolitan areas. Source: Annual Report on Domestic Migration Compiled from Residency Registers, Statistics Bureau, Management and Coordination Agency
12
Chapter 2 - The Labor Markets
Table 4: Changes in Registered Alien Population by Nationality (Year end figures)
Nationality
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Total
984,455
1,075,317
1,218,891
1,281,644
1,320,748
1,354,011
1,362,371
1,415,136
1,482,707
1,512,116
North/South Korea
681,838
687,940
693,050
688,144
682,276
676,793
666,376
657,159
645,373
638,828
Distribution(%)
69.2
64.0
56.9
53.7
51.7
50.0
48.9
46.4
43.5
42.2
137,499
150,339
171,071
195,334
210,138
218,585
222,991
234,264
252,164
272,230
14.0
14.0
14.0
15.2
15.9
16.1
16.4
16.6
17.0
18.0
14,528
56,429
119,333
147,803
154,650
159,619
176,440
201,796
233,254
222,217
1.5
5.2
9.8
11.5
11.7
11.8
13.0
14.3
15.7
14.7
38,925
49,092
61,837
62,218
73,057
85,968
74,297
84,509
93,265
105,308
4.0
4.6
5.1
4.9
5.5
6.4
5.5
6.0
6.3
7.0
34,900
38,364
42,498
42,482
42,639
43,320
43,198
44,168
43,690
42,774
3.5
3.6
3.5
3.3
3.2
3.2
3.2
3.1
3.0
2.8
4,121
10,279
26,281
31,051
33,169
35,382
36,269
37,099
40,394
41,317
0.4
0.9
2.1
2.4
2.5
2.6
2.7
2.6
2.7
2.7
72,644
82,874
104,821
114,612
124,819
134,344
142,800
156,142
174,567
189,442
7.4
7.7
8.6
9.0
9.5
9.9
10.5
11.0
11.8
12.6
China Distribution(%) Brazil Distribution(%) Philippins Distribution(%) U.S. Distribution(%) Peru Distribution(%) Others Distribution(%)
Source: Ststistics on Aliens in Japan, Immigration Associaton(1999)
Figure 9: Changes in the Distribution of Alien Residents by Nationality 100 Others Peru U.S. Philippines
80
Brazil
60 China
40
North/ South Korea
20
0 (End of) 1989
1990
1991
1992
1993
1994
1995
Source: Statistics on Aliens in Japan, Immigration Association(1999)
13
1996
1997
1998
2
The Labor Force
Figure 10 shows the composition of Japan's labor force, which rose from 41.94 million to 67.79 million between 1955 and 1999. During that same period, the number of persons aged 15 and over increased from 59.25 million to 107.95 million. In 1955, the ratio of the labor force to the over-15 population (labor force participation ratio) was 71.0%. However, due to a decline in the number of people engaged in farming, the self-employed, and workers in family-owned businesses, the ratio began a longterm decline soon after 1955. By 1973, the year of the first oil crisis, it had fallen to 62.9%, where it remains, more or less, today (Figure 11). Figure 12 shows changes in the labor force participation ratio by sex and age for 1965, 1975, 1985, and 1998. From these data, we can extrapolate the following conclusions. 1) The labor force participation ratio for young (25 and under) and elderly (55 and over) males is low. However, it has not changed significantly for other male age groups. 2) The number of employed females was 5.31 million in 1955, but had risen fourfold by 1998, to 21.24 million. In Figure 13, the labor force participation ratio for women forms an "M" shape, representing a low ratio for women ranging in age from the late 20's to 40. However, the valley in the "M" has shifted to the
14
right and upward over the last two decades. The peaks of the "M" have also shifted upward, with the increase in the labor force participation ratio. Changes in the "M" indicate that: 1) As both men and women tend to attend school for a longer time than in the past, the labor force participation ratio for teenagers has dropped sharply. In 1960, only 57.7% of Japan's young people attended high school, as opposed to 96% today. In 1960, 10.3% of the college-age population attended junior colleges or four-year colleges. That figure had climbed to 49.1% by 1996 (Figure 13). 2) The increase in the labor force participation ratio for women in their late 20's is accounted for by the fact that women now tend to marry and bear their children later than in the past. There is also a higher proportion of unmarried women (Figure 14). 3) Previously, women did not work while they were raising children. In recent years, however, an increasing number of women have are remaining employed after marriage. 4) Once their children are grown, many women in their 40's are returning to the labor force as part-time workers.
Chapter 2 - The Labor Markets
Figure 10: Composition of the Labor Force (Unit:10,000 persons)
Total population 12,669
Persons aged under 15 1,874
Persons aged 15 and over 10,795
Non-working population 3,989
Labor force 6,779
Workers 6,462 Unemployed persons 317 Employees 5,331 Workers in family-owned businesses 356 Self-employed persons 754 Note: The figures above are average values for 1999. Source: Labor Force Survey, Statistics Bureau, Management and Coordination Agency
Figure 11: Changes in the Labor Force (Unit: 10,000 persons)
(Unit: 10,000 persons)
Unemployed persons (scale at right)
Total population (scale at left)
Labor force (scale at left) Persons aged 15 and over (scale at left)
Workers (scale at left)
Employees (scale at left)
FY Source: Labor Force Survey, Statistics Bureau, Management and Coordination Agency,
15
Figure 12: Changes in the Labor Force Participation Ratio by Sex and Age
1965
1975
1985
1998
1965
1975
1985
1998
Source: Annual Report on the Labor Force Survey, Statistics Bureau, Management and Coordination Agency, 1998
16
Chapter 2 - The Labor Markets
Figure 13: Changes in Attendance at Junior and Four-Year Colleges and Universities
Males and females Source: School Survey Report, Ministry of Education (issued annually)
Figure 14: Rise in the Average Age of Marriage and Childbirth (Women) (Age)
Source: Vital Statistics of Japan, Health and Welfare Statistics Association
17
3
Diversification of the Employment Structure
Japan's economic structure has been undergoing a fundamental shift in orientation, moving away from secondary industries (e.g., manufacturing) and toward tertiary industries (e.g., services). Behind this shift to a service economy lies a broader diversification of the employment structure, as demonstrated by the increase of part-time workers and dispatched workers (workers supplied by temporary employment agencies). According to the "Survey of the Diversification of the Employment Status" issued by the Ministry of Labor in 1996, nonregular workers, mainly women and employees of small and medium-sized companies, accounted for 22.8% of the labor force. The majority of these non-regular workers were part-time workers (13.7%), followed by temporary and casual workers (4.4%), and dispatched workers (0.7%) (Table 5). However, part-time workers are not a homogeneous group. In surveys, they are defined as "official" part-time workers and "other" part-time workers. According to the Labor Code, official part-time workers work regular hours, but a shorter work week than full-time employees, at one place of employment. "Other part-time workers" is a term used by employers. Part-time workers, as defined by the Management and Coordination Agency's Labor Force Survey (those working fewer than 35 hours per week and employed outside the farming and forestry industries) numbered 4.71 million in 1985, and 11.13 million in 1997 (Table 6). Most part-time workers are housewives, but they are not evenly distributed among all occupations. Part-time workers are used in three main industries: wholesale and retail, food and beverage, and services. They are most likely to be found working in shops. However, today one sees an increasing number of part-timers working in the manufacturing industries, a trend that characterizes part-time employment in Japan (Table 5). Employers benefit from the use of part-time workers in two ways: (1) lower personnel costs, and (2) the ability
18
to meet varying business demands on a daily or weekly basis (Table 7). Part-time workers report that they prefer work schedules that suit their convenience, and that they wish to earn money to help meet household or educational expenses (Table 8). Dispatched workers are defined by the Manpower Dispatching Business Law, enacted in 1986, as "workers under contract to a dispatching agency, who are entrusted with specific duties by the companies to which they are assigned." At first, dispatched workers could only be used to perform duties that required a high degree of specialization. However, a revision made to the aforementioned law in 1999 allows dispatched workers to perform any type of work, with the exception of: (1) longshoring, (2) construction work, (3) security, and (4) work determined by orders based on an opinion submitted by the Central Employment Security Council. According to the Report on Employment Agencies issued by the Ministry of Labor, there were 144,000 dispatched workers in 1986 (including designated full-time dispatched workers, full-time employees of general temporary employment agencies, and workers registered at general employment agencies), and 895,000 in 1998 (Table 6). Companies that use dispatched workers reported that their main reason for doing so is the need for specialized work (Table 7), as compared with reasons given for hiring part-time workers. Therefore, both part-time workers and dispatched workers have clearly increased in number. Due to the growing tendency of companies to combine the use of regular and non-regular workers to reduce personnel costs and handle specialized tasks more efficiently, future company policies are very likely to specify the more widespread use of non-regular workers. As this tendency becomes the norm, the need will arise for employers to offer more social security benefits and training opportunities to these workers. Regulations that specify their job descriptions will also be necessary.
Chapter 2 - The Labor Markets
Table 5: Regular and Non-Regular Workers by Type of Employment
(Workers supplied by temporary agencies)
Industry total Mining Construction Manufacturing Public utilities Transportation, telecommunications Wholesale, retail, food and beverage Finance, insurance Real estate Services Type of establishment Office Factory Research center Sales office Store Other
Company size
Notes: 1) "Regular workers" refers to those who work on a permanent basis. Employees transferred to another company on a temporary basis have not been included. 2) "Non-regular workers" refers to employees transferred on a temporary basis, dispatched, part-time, temporary, casual, contract and registered workers, and all other non-regular workers. 3) "Workers supplied by temporary agencies" refers to workers who are recruited and placed by temporary employment agencies as prescribed in the Manpower Dispatching Business Law, enacted to ensure that these agencies conduct their business ethically and to improve the working conditions of the workers they use. The Manpower Dispatching Business Law applies to the following 16 occupational categories: Software developers, office equipment operators, researchers, tour conductors, machine designers, interpreters, translators, stenographers, financial managers, office cleaners, workers who operate, check, and maintain broadcasting equipment; secretaries, business document preparers, building inspection and maintenance workers, broadcast program directors, file clerks, demonstrators, receptionists, guides, and parking-lot attendants (as of 1994). 4) "Part-time workers" are employees whose scheduled daily or weekly working hours are shorter than those of regular employees, whether regular or non-regular. 5) "Temporary and casual workers" are employed on a temporary or daily basis, respectively. Their daily and weekly working hours are the same as those of regular employees. 6) "Others" includes temporarily transferred, and contract and registered workers. Source: Survey of the Diversification of Employment Status, Ministry of Labour, 1996
19
Table 6: Changes in the Number of Part-Time Workers and Workers Supplied by Temporary Employment Agencies (Unit: 10,000 persons)
Workers supplied by temporary employment agencies
Fiscal year
Sources: The definition of part-time workers derives from the Management and Coordination Agency's annual Labor Force Survey. Part-time workers are defined as persons working an average of 1-34 hours per week. The figures in the table represent combined totals for male and female workers. "Workers supplied by temporary employment agencies" are as defined in the Ministry of Labor's Report on Employment Agencies (1998). The figures in the table include ordinary and specialized temporary workers registered with temporary employment agencies.
20
Chapter 2 - The Labor Markets
Table 7: Percentage of Businesses Hiring Non-Regular Workers and Reasons for Hiring Non-Regular Workers, by Employment Status (Multiple responses permitted; %) Workers supplied by temporary agencies
Reasons for hiring
Unable to recruit regular workers Need to adjust hiring practices due to changes in business conditions Need to control labor costs Require more workers because of extended business hours Require additional personnel on a daily or weekly basis Need to meet temporary or seasonal demand Require persons capable of doing specialized work Require persons with experience and expertise Wish to reemploy older workers Wish to reemploy women who quit their jobs to raise children Other Source: Survey of the Diversification of Employment Status, Ministry of Labour,1996 Editors' note: The reasons for hiring do not add up to 100 because multiple responses were permitted.
Table 8: Non-Regular Workers' Reasons for Selecting Current Employment Status, by Employment Status (Multiple responses permitted; %) Workers supplied by employment agencies
Reasons for selecting current employment status
I can choose my own hours. I can balance my work schedule with my school classes. I don't want to work full time. I can resign at any time. I can put my special qualifications and abilities to use. I wanted to earn more money. I want to earn extra money to defray educational or household expenses. I want to get out into society. I couldn't find a permanent position. I want an easy job without much responsibility. I think working is good for my health. Other Source: Survey of the Diversification of Employment Status, Ministry of Labour,1996. (See editors' note to Table 5.)
21
Employment and Unemployment Trends
4
Changes in the Employment Structure In 1950, there were 36 million workers in Japan. By 1999, there were 65 million, an increase of 29 million over approximately half a century. The large numbers of new workers who entered the labor force during the decades following World War II altered Japan's industrial and occupational structures. The major long-term changes in the composition of the labor force, by industry, are as follows. 1. In 1950, workers in the primary industries, which support many self-employed persons (who are likely to join the ranks of the hidden unemployed), accounted for about half of the labor force. By 1995, this figure had decreased to 6%. 2. Employment in the secondary industries (the manufacturing sector) grew rapidly during the long period of high economic growth. By 1970, 34% of the labor force was working in these industries. Since this expansion of the labor force enabled the economy to absorb much of the surplus labor from the primary sector, Japan's overall unemployment never exceeded 2%. 3. Later, as employment in the manufacturing sector began to level off, employment in the tertiary industries rose significantly, especially in the service sector. More than 50% of all workers were employed in the tertiary industries by 1975, 60% by 1995. The occupational structure has changed as well, with a long-term increase in the number of clerical, specialized, and technical workers. Of the 65 million persons currently employed in Japan, 53 million are employees, 8 million are self-employed, and 4 million are working in family-owned businesses. Over the past 50 years, the number of employees has increased, while the ranks of the self-employed and persons working in family-owned businesses have diminished. The ratio of employees to the total labor force climbed from 39% in 1950 to 81% in 1975, and continues to increase. Consequently, unemployment has become more apparent, rising to 2% (one million persons) during the oil crises of the 1970's.
Changes in Unemployment Rates and the Unemployment Structure During the years of high economic growth, the unemployment rate fell to a low 1%, but rose to 2% when economic conditions worsened due to the first oil crisis. It remained at 2% until the collapse of the bubble
22
economy in the early 1990's, when a long-term recession caused it to leap to 3%, and then 4% in early 1998. There are at least two major causes of the long-term rise in unemployment. The first is the imbalance between supply and demand, which has worsened over the years. Subsequent to the period of high economic growth, demand was influenced by the increasing prominence of the service sector and information technologies, and globalization. These changes, all significant, have created a demand for workers with diverse, specialized skills. Supply has changed as well, with women and senior citizens entering the job market, while young job-seekers adhere to a different value system than did previous generations. Thus, demand and supply are moving in opposite directions, widening the gap in the market. Another reason for the increase in the unemployment rate is the changing response of businesses to personnel needs. Long-term employment has traditionally characterized Japanese companies. Even in hard times, companies have struggled to preserve the status quo by refraining from laying off or discharging employees. However, with market competition intensifying, and changes in the business climate caused by several recessions following the first oil crisis (including recent global economic slumps), there are only limited employment opportunities within corporate groups. More companies have been forced to reduce their staffs, and to rely on part-time and dispatched workers to keep labor costs down. These circumstances are responsible in part for the higher unemployment rate. Unemployment is particularly high among males aged 15-24 and 60-64, and females aged 15-24 and 25-34. For the younger people, unemployment stems from the imbalance between supply and demand, and from a greater tendency on their part to resign from or change jobs. Now that the mandatory retirement age has been raised from 55 to 60, there is less unemployment among men aged 55-59. However, there are now more unemployed men aged over 60, because they have difficulty finding new positions. In Figure 18, we show an international comparison of unemployment rates, based on statistics published by the OECD. The OECD uses rates that have been standardized- adjusted to conform to ILO (International Labor Organization) standards- and designed to minimize the differences in the way Japan, the U.S., and the nations of the EU compute unemployment rates. Since these differences are not great, the OECD figures are very close to official statistics published by the nations surveyed.
Chapter 2 - The Labor Markets
Figure 15: Shifts in the Employment Structure by Industrial Sector
Source: Report on the National Census, Statistics Bureau, Management and Coordination, Agency, 1999
Figure 16: Shifts in Employment by Occupation
Craftspersons, miners, manufacturing and construction workers and laborers Transportation and communications workers Agriculture, forestry, and fishery workers Security guards Workers in the service sector Salespersons Clerical workers Managers Professional and technical workers
Source: Report on the National Census, Statistics Bureau, Management and Coordination Agency, 1999
23
Figure 17: Changes in the Unemployment Rate
(Year) Source: Annual Report on the Labor Force Survey, Statistics Bureau, Management and Coordination Agency
Figure 18: International Comparison of Standardized Unemployment Rates
;;;;
;;;;
;;;; ;;;; ;;;;
;;;;
;;;;
Source:Quarterly Labor Force Statistics, OECD
24
Chapter 2 - The Labor Markets
Figure 19: Changes in the Unemployment Rate by Sex and Age Group
;; ;;
;
Source: Report on the Labor Force Survey, Statistics Bureau, Management and Coordination Agency (issued annually)
25
Labour Situation in Japan 2000 - Contents Chapter 1 The Economy, Industries and Corporations 1. The Japanese Economy: The Current Situation and the Outlook for the Future 2. Changes in Industrial and Employment Structures and Projections for the Future 3. Corporate Management Systems 4. Small and Medium-sized Companies Chapter 2 The Labor Markets 1. Japan's Population 2. The Labor Force 3. Diversification of the Employment Structure 4. Employment and Unemployment Trends Chapter 3 Human Resource Management 1. The Long - Term Employment System 2. Personnel Assignment and Transfers 3. The Japanese Wage System 4. Conpany Benefits and Retirement Allowances 5. Career Development Through In-House Training and Enterprises Chapter 4 Labor Relations 1. Union Organizing in Japan 2. Lador Relations 3. Shunto - The Spring Wage Drive 4. Laws Governing Lador Relations 5. Labor - Management Disputes Chapter 5 Labor Laws and Labor Administration 1. Employment Policies and Efforts To Combat Unemployment 2. Policies Designed To Secure Employment for Older and Handicapped Workers 3. Working Hours and Efforts To Shorten Them 4. The Minimum Wage System 5. Safety and Health Maintenance at the Workplace 6. Equal Employment Oppurtunities: Policies and Goals 7. Public Vocational Training Policies 8. Child - Care and Home - Care Leave 9. Reforming Labor Administration Chapter 6 Workers Living Standrds 1. The Social Security System 2. Workers' Household Situation
1
Japan's Population
Between November 1945 (immediately after the end of World War II) and 1999, Japan's population increased by a factor of 1.74, from 72.15 million to 126.69 million. Higher postwar birth rates and lower death rates stimulated this exceptional increase, which occurred over only a half-century. During the first baby boom (1946), the population grew at an annual rate of 5%, but growth leveled off to 1% per year in the subsequent 10 years. The second baby boom occurred in the early 1970's, causing the rate of population growth to rise again until it once again reverted to 1% growth per year, and then began a steady decline. There were many reasons for the changes in population growth, among which was the abandonment of farming villages for urban life. In the cities, the norm became nuclear families headed by company employees (who produced fewer offspring), which supplanted extended families. This transition was also marked by the tendency to postpone marriage and child-bearing until a higher average age. The wider availability of postgraduate education, more opportunities for women in the job market, and higher employment rates were also contributing factors. The latest forecasts predict that Japan's population will peak in 2007 at 127.78 million, and then begin to decline for the first time in history (Figure 7). Demographic changes will also become more pronounced, as birth rates fall and the elderly population increases. The working population is already diminishing in both real and proportional terms. As a result, economic growth is slowing, and the burden of supporting the younger and older segments of society is becoming a serious problem. As the labor force ages, we have observed a decrease in the number of young workers, and in overall manpower as well. Figure 9 shows population shifts between three major urban areas and other areas of Japan over the years.
One striking pattern is the shift from rural areas to major cities during the period of high economic growth in the 1950's and 1960's. With the exception of the eldest sons of families engaged in agriculture, people moved from farming areas (where employment opportunities were limited) to cities, where they could easily find work in the rapidly developing secondary and tertiary industrial sectors. The results of this shift were a depletion of the population in the countryside, and overcrowding in urban centers. A subsequent shift saw a migration from congested cities to the suburbs. Geographic shifts in population finally began to subside with the 1973 oil crisis and the subsequent tapering off of economic growth. There are many difficulties associated with the heavy concentration of population in the Greater Tokyo area, as opposed to other urban centers. Also noteworthy (though not so much in terms of absolute population) is the tendency for people to move from their birthplaces in the countryside to an urban center, and later back to their hometowns or a city near their hometowns. With the globalization of the economy, the foreign population in Japan is also increasing. In the past, North and South Koreans accounted for the majority of Japan's resident aliens. Today they represent only a little more than 40% of that population (Table 4, Figure 9). However, there has been an influx of Chinese and other Asians, and of Central and South Americans of Japanese descent who have come to Japan seeking employment, and who hold permanent-resident visas. This trend has been increasing since the days of the bubble economy in the 1980's. The influx from Brazil began to subside in 1998, but that from Peru continues to grow. The number of registered aliens has increased steadily as well, reaching 1.512 million in 1998. Nevertheless, foreign residents account for only 1.2% of the total population.
11
Figure 7: Projected Population Shifts (Unit: 10,000 persons)
Medium growth rate from previous projection High growth rate Medium growth rate Low growth rate Low growth rate from previous projection
Actual figures
(Fiscal year) Note: We have provided three types of population growth (low, medium, and high), based on differences in birth-rate projections. Source: Population Projections for Japan, National Institute of Population and Social Security Research (January 1997)
Figure 8: Movement of Population Between or Within Large Urban Centers
(Unit: 10,000 persons)
;;;;;;;;;;;;;; ;;;;;;;;;;;;;; From non-urban areas ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; to urban centers ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; ;;;;;;;;;;;;;; ;;;;;;;;;;;;;;
;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;; Within urban centers ;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;
;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; Within non-urban areas ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;; From urban centers to ;;;;;;;;;;;;;;;; non-urban areas ;;;;;;;;;;;;;;;; ;;;;;;;;;;;;;;;; (Fiscal year) Note: "Urban centers" includes the Tokyo, Osaka-Kobe, and Nagoya metropolitan areas. Source: Annual Report on Domestic Migration Compiled from Residency Registers, Statistics Bureau, Management and Coordination Agency
12
Chapter 2 - The Labor Markets
Table 4: Changes in Registered Alien Population by Nationality (Year end figures)
Nationality
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Total
984,455
1,075,317
1,218,891
1,281,644
1,320,748
1,354,011
1,362,371
1,415,136
1,482,707
1,512,116
North/South Korea
681,838
687,940
693,050
688,144
682,276
676,793
666,376
657,159
645,373
638,828
Distribution(%)
69.2
64.0
56.9
53.7
51.7
50.0
48.9
46.4
43.5
42.2
137,499
150,339
171,071
195,334
210,138
218,585
222,991
234,264
252,164
272,230
14.0
14.0
14.0
15.2
15.9
16.1
16.4
16.6
17.0
18.0
14,528
56,429
119,333
147,803
154,650
159,619
176,440
201,796
233,254
222,217
1.5
5.2
9.8
11.5
11.7
11.8
13.0
14.3
15.7
14.7
38,925
49,092
61,837
62,218
73,057
85,968
74,297
84,509
93,265
105,308
4.0
4.6
5.1
4.9
5.5
6.4
5.5
6.0
6.3
7.0
34,900
38,364
42,498
42,482
42,639
43,320
43,198
44,168
43,690
42,774
3.5
3.6
3.5
3.3
3.2
3.2
3.2
3.1
3.0
2.8
4,121
10,279
26,281
31,051
33,169
35,382
36,269
37,099
40,394
41,317
0.4
0.9
2.1
2.4
2.5
2.6
2.7
2.6
2.7
2.7
72,644
82,874
104,821
114,612
124,819
134,344
142,800
156,142
174,567
189,442
7.4
7.7
8.6
9.0
9.5
9.9
10.5
11.0
11.8
12.6
China Distribution(%) Brazil Distribution(%) Philippins Distribution(%) U.S. Distribution(%) Peru Distribution(%) Others Distribution(%)
Source: Ststistics on Aliens in Japan, Immigration Associaton(1999)
Figure 9: Changes in the Distribution of Alien Residents by Nationality 100 Others Peru U.S. Philippines
80
Brazil
60 China
40
North/ South Korea
20
0 (End of) 1989
1990
1991
1992
1993
1994
1995
Source: Statistics on Aliens in Japan, Immigration Association(1999)
13
1996
1997
1998
2
The Labor Force
Figure 10 shows the composition of Japan's labor force, which rose from 41.94 million to 67.79 million between 1955 and 1999. During that same period, the number of persons aged 15 and over increased from 59.25 million to 107.95 million. In 1955, the ratio of the labor force to the over-15 population (labor force participation ratio) was 71.0%. However, due to a decline in the number of people engaged in farming, the self-employed, and workers in family-owned businesses, the ratio began a longterm decline soon after 1955. By 1973, the year of the first oil crisis, it had fallen to 62.9%, where it remains, more or less, today (Figure 11). Figure 12 shows changes in the labor force participation ratio by sex and age for 1965, 1975, 1985, and 1998. From these data, we can extrapolate the following conclusions. 1) The labor force participation ratio for young (25 and under) and elderly (55 and over) males is low. However, it has not changed significantly for other male age groups. 2) The number of employed females was 5.31 million in 1955, but had risen fourfold by 1998, to 21.24 million. In Figure 13, the labor force participation ratio for women forms an "M" shape, representing a low ratio for women ranging in age from the late 20's to 40. However, the valley in the "M" has shifted to the
14
right and upward over the last two decades. The peaks of the "M" have also shifted upward, with the increase in the labor force participation ratio. Changes in the "M" indicate that: 1) As both men and women tend to attend school for a longer time than in the past, the labor force participation ratio for teenagers has dropped sharply. In 1960, only 57.7% of Japan's young people attended high school, as opposed to 96% today. In 1960, 10.3% of the college-age population attended junior colleges or four-year colleges. That figure had climbed to 49.1% by 1996 (Figure 13). 2) The increase in the labor force participation ratio for women in their late 20's is accounted for by the fact that women now tend to marry and bear their children later than in the past. There is also a higher proportion of unmarried women (Figure 14). 3) Previously, women did not work while they were raising children. In recent years, however, an increasing number of women have are remaining employed after marriage. 4) Once their children are grown, many women in their 40's are returning to the labor force as part-time workers.
Chapter 2 - The Labor Markets
Figure 10: Composition of the Labor Force (Unit:10,000 persons)
Total population 12,669
Persons aged under 15 1,874
Persons aged 15 and over 10,795
Non-working population 3,989
Labor force 6,779
Workers 6,462 Unemployed persons 317 Employees 5,331 Workers in family-owned businesses 356 Self-employed persons 754 Note: The figures above are average values for 1999. Source: Labor Force Survey, Statistics Bureau, Management and Coordination Agency
Figure 11: Changes in the Labor Force (Unit: 10,000 persons)
(Unit: 10,000 persons)
Unemployed persons (scale at right)
Total population (scale at left)
Labor force (scale at left) Persons aged 15 and over (scale at left)
Workers (scale at left)
Employees (scale at left)
FY Source: Labor Force Survey, Statistics Bureau, Management and Coordination Agency,
15
Figure 12: Changes in the Labor Force Participation Ratio by Sex and Age
1965
1975
1985
1998
1965
1975
1985
1998
Source: Annual Report on the Labor Force Survey, Statistics Bureau, Management and Coordination Agency, 1998
16
Chapter 2 - The Labor Markets
Figure 13: Changes in Attendance at Junior and Four-Year Colleges and Universities
Males and females Source: School Survey Report, Ministry of Education (issued annually)
Figure 14: Rise in the Average Age of Marriage and Childbirth (Women) (Age)
Source: Vital Statistics of Japan, Health and Welfare Statistics Association
17
3
Diversification of the Employment Structure
Japan's economic structure has been undergoing a fundamental shift in orientation, moving away from secondary industries (e.g., manufacturing) and toward tertiary industries (e.g., services). Behind this shift to a service economy lies a broader diversification of the employment structure, as demonstrated by the increase of part-time workers and dispatched workers (workers supplied by temporary employment agencies). According to the "Survey of the Diversification of the Employment Status" issued by the Ministry of Labor in 1996, nonregular workers, mainly women and employees of small and medium-sized companies, accounted for 22.8% of the labor force. The majority of these non-regular workers were part-time workers (13.7%), followed by temporary and casual workers (4.4%), and dispatched workers (0.7%) (Table 5). However, part-time workers are not a homogeneous group. In surveys, they are defined as "official" part-time workers and "other" part-time workers. According to the Labor Code, official part-time workers work regular hours, but a shorter work week than full-time employees, at one place of employment. "Other part-time workers" is a term used by employers. Part-time workers, as defined by the Management and Coordination Agency's Labor Force Survey (those working fewer than 35 hours per week and employed outside the farming and forestry industries) numbered 4.71 million in 1985, and 11.13 million in 1997 (Table 6). Most part-time workers are housewives, but they are not evenly distributed among all occupations. Part-time workers are used in three main industries: wholesale and retail, food and beverage, and services. They are most likely to be found working in shops. However, today one sees an increasing number of part-timers working in the manufacturing industries, a trend that characterizes part-time employment in Japan (Table 5). Employers benefit from the use of part-time workers in two ways: (1) lower personnel costs, and (2) the ability
18
to meet varying business demands on a daily or weekly basis (Table 7). Part-time workers report that they prefer work schedules that suit their convenience, and that they wish to earn money to help meet household or educational expenses (Table 8). Dispatched workers are defined by the Manpower Dispatching Business Law, enacted in 1986, as "workers under contract to a dispatching agency, who are entrusted with specific duties by the companies to which they are assigned." At first, dispatched workers could only be used to perform duties that required a high degree of specialization. However, a revision made to the aforementioned law in 1999 allows dispatched workers to perform any type of work, with the exception of: (1) longshoring, (2) construction work, (3) security, and (4) work determined by orders based on an opinion submitted by the Central Employment Security Council. According to the Report on Employment Agencies issued by the Ministry of Labor, there were 144,000 dispatched workers in 1986 (including designated full-time dispatched workers, full-time employees of general temporary employment agencies, and workers registered at general employment agencies), and 895,000 in 1998 (Table 6). Companies that use dispatched workers reported that their main reason for doing so is the need for specialized work (Table 7), as compared with reasons given for hiring part-time workers. Therefore, both part-time workers and dispatched workers have clearly increased in number. Due to the growing tendency of companies to combine the use of regular and non-regular workers to reduce personnel costs and handle specialized tasks more efficiently, future company policies are very likely to specify the more widespread use of non-regular workers. As this tendency becomes the norm, the need will arise for employers to offer more social security benefits and training opportunities to these workers. Regulations that specify their job descriptions will also be necessary.
Chapter 2 - The Labor Markets
Table 5: Regular and Non-Regular Workers by Type of Employment
(Workers supplied by temporary agencies)
Industry total Mining Construction Manufacturing Public utilities Transportation, telecommunications Wholesale, retail, food and beverage Finance, insurance Real estate Services Type of establishment Office Factory Research center Sales office Store Other
Company size
Notes: 1) "Regular workers" refers to those who work on a permanent basis. Employees transferred to another company on a temporary basis have not been included. 2) "Non-regular workers" refers to employees transferred on a temporary basis, dispatched, part-time, temporary, casual, contract and registered workers, and all other non-regular workers. 3) "Workers supplied by temporary agencies" refers to workers who are recruited and placed by temporary employment agencies as prescribed in the Manpower Dispatching Business Law, enacted to ensure that these agencies conduct their business ethically and to improve the working conditions of the workers they use. The Manpower Dispatching Business Law applies to the following 16 occupational categories: Software developers, office equipment operators, researchers, tour conductors, machine designers, interpreters, translators, stenographers, financial managers, office cleaners, workers who operate, check, and maintain broadcasting equipment; secretaries, business document preparers, building inspection and maintenance workers, broadcast program directors, file clerks, demonstrators, receptionists, guides, and parking-lot attendants (as of 1994). 4) "Part-time workers" are employees whose scheduled daily or weekly working hours are shorter than those of regular employees, whether regular or non-regular. 5) "Temporary and casual workers" are employed on a temporary or daily basis, respectively. Their daily and weekly working hours are the same as those of regular employees. 6) "Others" includes temporarily transferred, and contract and registered workers. Source: Survey of the Diversification of Employment Status, Ministry of Labour, 1996
19
Table 6: Changes in the Number of Part-Time Workers and Workers Supplied by Temporary Employment Agencies (Unit: 10,000 persons)
Workers supplied by temporary employment agencies
Fiscal year
Sources: The definition of part-time workers derives from the Management and Coordination Agency's annual Labor Force Survey. Part-time workers are defined as persons working an average of 1-34 hours per week. The figures in the table represent combined totals for male and female workers. "Workers supplied by temporary employment agencies" are as defined in the Ministry of Labor's Report on Employment Agencies (1998). The figures in the table include ordinary and specialized temporary workers registered with temporary employment agencies.
20
Chapter 2 - The Labor Markets
Table 7: Percentage of Businesses Hiring Non-Regular Workers and Reasons for Hiring Non-Regular Workers, by Employment Status (Multiple responses permitted; %) Workers supplied by temporary agencies
Reasons for hiring
Unable to recruit regular workers Need to adjust hiring practices due to changes in business conditions Need to control labor costs Require more workers because of extended business hours Require additional personnel on a daily or weekly basis Need to meet temporary or seasonal demand Require persons capable of doing specialized work Require persons with experience and expertise Wish to reemploy older workers Wish to reemploy women who quit their jobs to raise children Other Source: Survey of the Diversification of Employment Status, Ministry of Labour,1996 Editors' note: The reasons for hiring do not add up to 100 because multiple responses were permitted.
Table 8: Non-Regular Workers' Reasons for Selecting Current Employment Status, by Employment Status (Multiple responses permitted; %) Workers supplied by employment agencies
Reasons for selecting current employment status
I can choose my own hours. I can balance my work schedule with my school classes. I don't want to work full time. I can resign at any time. I can put my special qualifications and abilities to use. I wanted to earn more money. I want to earn extra money to defray educational or household expenses. I want to get out into society. I couldn't find a permanent position. I want an easy job without much responsibility. I think working is good for my health. Other Source: Survey of the Diversification of Employment Status, Ministry of Labour,1996. (See editors' note to Table 5.)
21
Employment and Unemployment Trends
4
Changes in the Employment Structure In 1950, there were 36 million workers in Japan. By 1999, there were 65 million, an increase of 29 million over approximately half a century. The large numbers of new workers who entered the labor force during the decades following World War II altered Japan's industrial and occupational structures. The major long-term changes in the composition of the labor force, by industry, are as follows. 1. In 1950, workers in the primary industries, which support many self-employed persons (who are likely to join the ranks of the hidden unemployed), accounted for about half of the labor force. By 1995, this figure had decreased to 6%. 2. Employment in the secondary industries (the manufacturing sector) grew rapidly during the long period of high economic growth. By 1970, 34% of the labor force was working in these industries. Since this expansion of the labor force enabled the economy to absorb much of the surplus labor from the primary sector, Japan's overall unemployment never exceeded 2%. 3. Later, as employment in the manufacturing sector began to level off, employment in the tertiary industries rose significantly, especially in the service sector. More than 50% of all workers were employed in the tertiary industries by 1975, 60% by 1995. The occupational structure has changed as well, with a long-term increase in the number of clerical, specialized, and technical workers. Of the 65 million persons currently employed in Japan, 53 million are employees, 8 million are self-employed, and 4 million are working in family-owned businesses. Over the past 50 years, the number of employees has increased, while the ranks of the self-employed and persons working in family-owned businesses have diminished. The ratio of employees to the total labor force climbed from 39% in 1950 to 81% in 1975, and continues to increase. Consequently, unemployment has become more apparent, rising to 2% (one million persons) during the oil crises of the 1970's.
Changes in Unemployment Rates and the Unemployment Structure During the years of high economic growth, the unemployment rate fell to a low 1%, but rose to 2% when economic conditions worsened due to the first oil crisis. It remained at 2% until the collapse of the bubble
22
economy in the early 1990's, when a long-term recession caused it to leap to 3%, and then 4% in early 1998. There are at least two major causes of the long-term rise in unemployment. The first is the imbalance between supply and demand, which has worsened over the years. Subsequent to the period of high economic growth, demand was influenced by the increasing prominence of the service sector and information technologies, and globalization. These changes, all significant, have created a demand for workers with diverse, specialized skills. Supply has changed as well, with women and senior citizens entering the job market, while young job-seekers adhere to a different value system than did previous generations. Thus, demand and supply are moving in opposite directions, widening the gap in the market. Another reason for the increase in the unemployment rate is the changing response of businesses to personnel needs. Long-term employment has traditionally characterized Japanese companies. Even in hard times, companies have struggled to preserve the status quo by refraining from laying off or discharging employees. However, with market competition intensifying, and changes in the business climate caused by several recessions following the first oil crisis (including recent global economic slumps), there are only limited employment opportunities within corporate groups. More companies have been forced to reduce their staffs, and to rely on part-time and dispatched workers to keep labor costs down. These circumstances are responsible in part for the higher unemployment rate. Unemployment is particularly high among males aged 15-24 and 60-64, and females aged 15-24 and 25-34. For the younger people, unemployment stems from the imbalance between supply and demand, and from a greater tendency on their part to resign from or change jobs. Now that the mandatory retirement age has been raised from 55 to 60, there is less unemployment among men aged 55-59. However, there are now more unemployed men aged over 60, because they have difficulty finding new positions. In Figure 18, we show an international comparison of unemployment rates, based on statistics published by the OECD. The OECD uses rates that have been standardized- adjusted to conform to ILO (International Labor Organization) standards- and designed to minimize the differences in the way Japan, the U.S., and the nations of the EU compute unemployment rates. Since these differences are not great, the OECD figures are very close to official statistics published by the nations surveyed.
Chapter 2 - The Labor Markets
Figure 15: Shifts in the Employment Structure by Industrial Sector
Source: Report on the National Census, Statistics Bureau, Management and Coordination, Agency, 1999
Figure 16: Shifts in Employment by Occupation
Craftspersons, miners, manufacturing and construction workers and laborers Transportation and communications workers Agriculture, forestry, and fishery workers Security guards Workers in the service sector Salespersons Clerical workers Managers Professional and technical workers
Source: Report on the National Census, Statistics Bureau, Management and Coordination Agency, 1999
23
Figure 17: Changes in the Unemployment Rate
(Year) Source: Annual Report on the Labor Force Survey, Statistics Bureau, Management and Coordination Agency
Figure 18: International Comparison of Standardized Unemployment Rates
;;;;
;;;;
;;;; ;;;; ;;;;
;;;;
;;;;
Source:Quarterly Labor Force Statistics, OECD
24
Chapter 2 - The Labor Markets
Figure 19: Changes in the Unemployment Rate by Sex and Age Group
;; ;;
;
Source: Report on the Labor Force Survey, Statistics Bureau, Management and Coordination Agency (issued annually)
25
Labour Situation in Japan 2000 - Contents Chapter 1 The Economy, Industries and Corporations 1. The Japanese Economy: The Current Situation and the Outlook for the Future 2. Changes in Industrial and Employment Structures and Projections for the Future 3. Corporate Management Systems 4. Small and Medium-sized Companies Chapter 2 The Labor Markets 1. Japan's Population 2. The Labor Force 3. Diversification of the Employment Structure 4. Employment and Unemployment Trends Chapter 3 Human Resource Management 1. The Long - Term Employment System 2. Personnel Assignment and Transfers 3. The Japanese Wage System 4. Conpany Benefits and Retirement Allowances 5. Career Development Through In-House Training and Enterprises Chapter 4 Labor Relations 1. Union Organizing in Japan 2. Lador Relations 3. Shunto - The Spring Wage Drive 4. Laws Governing Lador Relations 5. Labor - Management Disputes Chapter 5 Labor Laws and Labor Administration 1. Employment Policies and Efforts To Combat Unemployment 2. Policies Designed To Secure Employment for Older and Handicapped Workers 3. Working Hours and Efforts To Shorten Them 4. The Minimum Wage System 5. Safety and Health Maintenance at the Workplace 6. Equal Employment Oppurtunities: Policies and Goals 7. Public Vocational Training Policies 8. Child - Care and Home - Care Leave 9. Reforming Labor Administration Chapter 6 Workers Living Standrds 1. The Social Security System 2. Workers' Household Situation
