Japan's Labour Market: The internal affairs ministry announced at the end of July that the national employment rate fell to 3.9% in June, down 0.2 percentage points from the previous month. It was the first time that the unemployment rate had dipped to a level below 4% since October 2008, weeks after the Lehman Brothers crash. However, behind the official window dressing is a dysfunctional system of lifers (jobs for life), temps (temporary workers) and banishment rooms known as oidashi-beya. The workforce breakdown in what are officially termed regular and irregular workers is roughly at a ratio of 60:40.
The Japanese jobs model dates from the 1920s and is based on a 'job for life,' seniority based pay, extensive career-long training, profits shared out fairly inside the firm, and active employee involvement in the life of the firm. Everything is done to build employee loyalty in return for wage-flexibility during recessionary periods. However, in the 1970s, almost 1m employees became jobless within their firms, with no precise task to perform but continuing to be paid due to an implicit social contract to maintain excess manpower.
As in other countries, a dual labour system developed where the rights of permanent workers remained sacrosanct while companies increasingly also hired temporary workers who could be dismissed with little notice and a company such as Toyota pays such staff less than the Irish minimum wage of €8.65 ($11) in a high-cost country.
The Japanese hourly manufacturing labour cost in an international comparison was US$35 in 2011. Ireland's was at $40 (Ireland has one of the lowest employer social security costs in Europe). [pdf}
Unless firms are going out of business, they are barred from firing staff employees. They can offer severance terms to employees but acceptance is voluntary. The oidashi-beya has developed to induce unwanted employees to leave.
Japan Daily Press reported last May:
The government has estimated that there are 4.6m surplus employees in Japanese companies -- about 13% of the permanent workforce.
Last June, Shinzo Abe, prime minister, announced the 'third arrow' in his reform program following monetary easing and a fiscal stimulus, which included raising the workforce participation rate for women aged 25-44 to 73%; increasing the percentage of female executives to at least 30%; doubling the number of profitable midsize companies to 1.4m.
While the plan had some minor proposals on labour reforms it has been suggested that the labour “surplus” could be swept away through a proposed law to enable creation of ‘jun-shain,’ or semi-regular staff.
A government report shows that irregular workers account for 38% of the nation’s employed workers, numbering over 20.m. As many as 57.5% of female workers fall into the irregular workforce category.
Compared with 2002, the number of manufacturing and construction workers dropped 1.7m and 1.15m, respectively by 2012 while the number of medical and welfare services workers rose 2.32m.
It's a similar pattern in the US where good-paying jobs in manufacturing have been replaced with low-paying jobs in services.
In a country that needs a lot more babies coupled with an antipathy to immigration, the imbalance of burdens on young people is not very wise.
French Treasury's briefing on Japan's labour market [pdf; in English]
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