Labor market of Japan

In 2010, Japan had a labor force of 65.9 million people, representing 59.6% of the aged 15 years and older. Among them, 62.57 million were employed, while 3.34 million were unemployed, yielding an unemployment rate of 5.1%. The structure of Japan's labor market experienced gradual change in the late 1980s and continued this trend throughout the 1990s. The structure of the labor market is affected by:

Shrinking population Replacement of postwar baby boom generation Increasing numbers of women in the labor force Workers' rising education level Increase in the number of foreign nationals in the labor force is foreseen In 2019, Japan had the lowest unemployment rate and the highest employment rate among the G7 countries. By 2021 the size of the labor force changed to 68.60 million, a decrease of 0.08 million from the previous year. Viewing by sex, the male labor force was 38.03 million, a decrease of 0.20 million, and the female labor force was 30.57 million, an increase of 0.13 million. The percentage of employed people increased to 62.1% from that of 59.6% in 2010. Breaking it by sex, the ratio of employed males was 71.3%, a decrease of 0.1 percent points from the previous year, and the ratio of the labor force of females was 53.5%, an increase of 0.3 percent points. In 2021, the labor force aged 15-64 was 59.31 million, a decrease of 0.15 million. Viewing by sex, the male labor force aged 15-64 was 32.52 million, a decrease of 0.20 million, and the female labor force aged 15-64 was 26.79 million, an increase of 0.06 million. The labor force participation rate of those aged 15-64 was 80.1%, an increase of 0.5 percent points. Viewing by sex, the participation rate of males aged 15-64 was 86.7%, an increase of 0.2 percent points.

Character The basic Japanese employment structure is known as "Simultaneous recruiting of new graduates" and "ranking hierarchy", which includes seniority wages and lifetime employment. It allows employees to learn broad skills to achieve in long-term perspective through job rotation and on-the-job training which is likely to be firm-specific. Since Japanese firms develop firm-specific skills throughout long-term employment, it is difficult to enter the internal labor market which is only open to new graduates from high school or university, or those who can be competitive in the market with their special qualification or knowledge. This internal market worked well in Japanese firms. However, Japan has shifted to US-type regulation and capitalism after the burst of economic bubble, and Japanese firms have introduced two developments: 1) performance-related pay, and 2) non-regular employment such as part-time, temporary and hiring through human resource agencies. Performance-related pay requires short-term evaluation of employees' performance, which means that wage could reflect immediate job performance rather than the skills over the long-term. This could have negative effect on the long-term development. It was suggested that this system cannot be efficacious for typical Japanese firms where skill-based wages motivate employees to gain experience and build their abilities. However, the notion of non-regular employment was introduced by the employer's association Nikkeiren and has been promoted since the 1990s. The principal reason of innovation in flexible staffing is not for flexibility but economizing labor costs. Non-regular employees are common in the retailing and restaurant sectors: 44.3% in retailing and 63.4% in restaurant/hotel industry compared to 17.7% in construction and 21.4% in manufacturing industry in 2004.

Demographic impact

… excerpt ends here. Continue reading the full article.