Labor market of Japan
Encyclopedia
The labor force in Japan numbered 65,900 thousand people in 2010, which was 59.6% of the population of 15 years old and older, and amongst them, 62,570 thousand people were employed, whereas 3,340 thousand people were unemployed which made the unemployment rate 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: 1) shrinking population, 2) replacement of postwar baby boom generation, 3) increasing numbers of women in the labor force, and 4) workers' rising education level. Also, increase in numbers of foreign nationals in the labor force is foreseen.
However, Japan has sifted 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.
Recently, Japan has seriously considered introducing "foreign workers" to the nation twice. The first was in the late 1980s, when there was the labor shortage because of the economic boom, however it was forgotten when the economy worsened. The second started in 1999 since the labor shortage caused by demographic change
reap the highest rewards. Such corporate structure presumably fostered not only a determined interest in the company but also a low percentage of workers who changed jobs.
During the postwar economic reconstruction, the backbone of the labor force was, of course, made up of people born before World War II
. These people grew up in a Japan that was still largely an agriculturally based economy and had little material wealth. Moreover, they had suffered the hardships of war and had accepted hard work as a part of their lives. In the late twentieth century, these people were being replaced by generations born after the war, and there were indications that the newcomers had different attitudes toward work. Postwar generations were accustomed to prosperity and were also better educated than their elders.
As might be expected, these socioeconomic changes have affected workers' attitudes. Prior to World War II, surveys indicated that the aspect of life regarded as most worthwhile was work. During the 1980s, the percentage of people who felt this way was declining. Workers' identification with their employers was weakening as well. A survey by the Management and Coordination Agency revealed that a record 2.7 million workers changed jobs in the one-year period beginning October 1, 1986, and the ratio of those who switched jobs to the total labor force matched the previous high recorded in 1974 (one year after the first oil crisis
). This survey also showed that the percentage of workers indicating an interest in changing jobs increased from 4.5 percent in 1971 to 9.9 percent in 1987.
Another indication of changing worker attitudes is the number of people meeting with corporate scouts to discuss the possibility of switching jobs. Corporations' treatment of older workers also affects attitudes: there are fewer positions for older workers, and many find themselves without the rewards that their predecessors had enjoyed.
Despite the now-reversed upward trend in the unemployment rate, many unpopular jobs go unfilled and the domestic labor market is sluggish. Imported labor is seen as a solution to this situation by some employers, who hire low-paid foreign workers, who are, in turn, enticed by comparatively high Japanese wages. The strict immigration laws are expected to remain on the books, however, although the influx of illegal aliens from nearby Asian countries (China
, South-East Asian and Middle-Eastern countries) to participate in the labor market is likely to increase.Japanese companies have also established foreign subsidiaries
to profit from low wages overseas. This trend started in Singapore
in the 1970s. The outsourcing helped to build local infrastructure and started a technological transfer, and some of the former subsidiaries and joint venture
s developed into fierce competitors.
During 2009, the national unemployment reached 5.7%, which is considerably high in Japan, especially in the manufacture industry which congregates in Tokai area, where estimated 83,000 of Japanese-Brazilians and Peruvians work in the industry. In april, the Japanese government budgeted 1.08 billion yen (valued 1.08 million US dollar in 2009) for Japanese-Brazilian immigrant workers for training, including Japanese language lesson, but also offered 300,000 yen (average wage of 18 to 39 years old in manufacture industry is 241,200 yen) to any unemployed workers who wished to leave the country and 200,000 yen each to their family members on the condition of not returning to Japan within 3 years with the same status
, reversed the process, and western companies were buying major stakes in big Japanese companies, especially car makers. The process became like that of the 1980s by the early 2000s, when the country experienced a major recovery under the Koizumi
administration. During that time, western stakes were greatly reduced or eliminated.
Character
The basic Japanese employment structure is known as "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 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 sifted 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
Japan is now facing a shortage of labor caused by two major demographic problems: shrinking population because of a low fertality rate, which was 1.4 per woman in 2009, and replacement of the postwar generation which is the biggest population range who are now around retirement age. The population aged over 15 to 64 years old is 63.7% (80,730 thousand people) of the total population; most of them are considered as productive population who work and support those who are too old or too young to work, while the percentage of the population aged 65 and over is 23.1% of the total population in 2011 This impacts the shortage of labor in the physical care of the aged people, and Japanese government started bring in care workers from overseas which is managed by bilateral agreements with Indonesia and the Philippines.Recently, Japan has seriously considered introducing "foreign workers" to the nation twice. The first was in the late 1980s, when there was the labor shortage because of the economic boom, however it was forgotten when the economy worsened. The second started in 1999 since the labor shortage caused by demographic change
Workers' changing attitudes
The success of corporations in Japan is attributable to the remarkable motivation of its workers. Also behind this corporate prosperity is the workers' strong sense of loyalty to and identification with their employers. While many theories have evolved to explain the extraordinary attitude of Japanese workers, perhaps the most noteworthy is that of personnel management. This view holds that loyalty to the company has developed as a result of job security and a wage system in which those with the greatest senioritySeniority
Seniority is the concept of a person or group of people being in charge or in command of another person or group. This control is often granted to the senior person due to experience or length of service in a given position, but it is not uncommon for a senior person to have less experience or...
reap the highest rewards. Such corporate structure presumably fostered not only a determined interest in the company but also a low percentage of workers who changed jobs.
During the postwar economic reconstruction, the backbone of the labor force was, of course, made up of people born before World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
. These people grew up in a Japan that was still largely an agriculturally based economy and had little material wealth. Moreover, they had suffered the hardships of war and had accepted hard work as a part of their lives. In the late twentieth century, these people were being replaced by generations born after the war, and there were indications that the newcomers had different attitudes toward work. Postwar generations were accustomed to prosperity and were also better educated than their elders.
As might be expected, these socioeconomic changes have affected workers' attitudes. Prior to World War II, surveys indicated that the aspect of life regarded as most worthwhile was work. During the 1980s, the percentage of people who felt this way was declining. Workers' identification with their employers was weakening as well. A survey by the Management and Coordination Agency revealed that a record 2.7 million workers changed jobs in the one-year period beginning October 1, 1986, and the ratio of those who switched jobs to the total labor force matched the previous high recorded in 1974 (one year after the first oil crisis
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
). This survey also showed that the percentage of workers indicating an interest in changing jobs increased from 4.5 percent in 1971 to 9.9 percent in 1987.
Another indication of changing worker attitudes is the number of people meeting with corporate scouts to discuss the possibility of switching jobs. Corporations' treatment of older workers also affects attitudes: there are fewer positions for older workers, and many find themselves without the rewards that their predecessors had enjoyed.
Workers from Overseas
Traditionally, Japan has had strict laws regarding the employment of foreigners, although exceptions were made for certain occupational categories. Excepted categories have included executives and managers engaged in commercial activities, full-time scholars associated with research and education institutions, professional entertainers, engineers and others specializing in advanced technology, foreign-language teachers, and others with special skills unavailable among Japanese nationals. Officially, in 2008 there were 486,400 foreign workers in Japan: 43.3% of Chinese, 20.4% of Brazilians, 8.3% of Filipinos and others (A labour Ministry survey of Companies)Despite the now-reversed upward trend in the unemployment rate, many unpopular jobs go unfilled and the domestic labor market is sluggish. Imported labor is seen as a solution to this situation by some employers, who hire low-paid foreign workers, who are, in turn, enticed by comparatively high Japanese wages. The strict immigration laws are expected to remain on the books, however, although the influx of illegal aliens from nearby Asian countries (China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, South-East Asian and Middle-Eastern countries) to participate in the labor market is likely to increase.Japanese companies have also established foreign subsidiaries
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
to profit from low wages overseas. This trend started in Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
in the 1970s. The outsourcing helped to build local infrastructure and started a technological transfer, and some of the former subsidiaries and joint venture
Joint venture
A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...
s developed into fierce competitors.
China and Vietnam
China has become an exporter of labor to Japan to perform low wage "3K", 3K; kitsui (demanding), kitanai (dirty), and kiken (dangerous), labor. Chinese workers are hired by Chinese companies which contract with Japanese industry to provide labor. The Japanese government facilitates the import of labor by adopting the fiction that the workers are "trainees" under the Japan International Training Cooperation Organization (JITCO). Hours are long, pay sub-standard, and the freedom of the workers while in Japan is restricted. The Chinese or Vietnamese workers customarily pay a substantial sum to enter the programs and may have to make a substantial deposit as a guarantee that once in Japan they will work for the assigned employer, nevertheless, once in Japan, a number abandon the program and seek illegal employment in Japan, only the most exploitive being available. There is also a substantial number or workers from Vietnam.Brazil
Japanese-Brazilians are descendants of Japanese who have immigrated to Brazil. They were discovered as a new labor source around 1990 and around one fifth of them now reside in Japan, which increased even after the collapse of the bubble economy in 1990. They are mainly located in two less appreciated sectors: 1) comparatively stable but low wage level in small to medium size factories troubled by constant labor shortage, and 2) highly unstable in medium to large size firms needing flexible staffing. The employers prefer Japanese-Brazilians to undocumented workers for racial or ethnocultural reasons. Earlier migrants were relatively fluent in Japanese, and caused less xenophobic reaction in factories. Undocumented workers tend to find jobs based on their personal networks whereas Brazilians do so through institutionalized channels, including recruiting agencies, and are paid more.During 2009, the national unemployment reached 5.7%, which is considerably high in Japan, especially in the manufacture industry which congregates in Tokai area, where estimated 83,000 of Japanese-Brazilians and Peruvians work in the industry. In april, the Japanese government budgeted 1.08 billion yen (valued 1.08 million US dollar in 2009) for Japanese-Brazilian immigrant workers for training, including Japanese language lesson, but also offered 300,000 yen (average wage of 18 to 39 years old in manufacture industry is 241,200 yen) to any unemployed workers who wished to leave the country and 200,000 yen each to their family members on the condition of not returning to Japan within 3 years with the same status
The United States of America
In the 1980s, the strong Yen allowed Japanese companies to buy several American firms, adding a large American workforce to Japanese companies. The crisis of the 1990s, the lost decadeLost Decade (Japan)
The is the time after the Japanese asset price bubble's collapse within the Japanese economy, which occurred gradually rather than catastrophically...
, reversed the process, and western companies were buying major stakes in big Japanese companies, especially car makers. The process became like that of the 1980s by the early 2000s, when the country experienced a major recovery under the Koizumi
Junichiro Koizumi
is a Japanese politician who served as Prime Minister of Japan from 2001 to 2006. He retired from politics when his term in parliament ended.Widely seen as a maverick leader of the Liberal Democratic Party , he became known as an economic reformer, focusing on Japan's government debt and the...
administration. During that time, western stakes were greatly reduced or eliminated.
See also
- FreetersFreetersis a Japanese expression for people between the ages of 15 and 34 who lack full time employment or are unemployed, excluding housewives and students...
(part-time jobbers) - NEETNEETNEET is a government acronym for people currently "not in education, employment, or training". It was first used in the United Kingdom but its use has spread to other countries, including Japan, China, and South Korea...
(not in employment, education or training) - Elderly people in JapanElderly people in JapanThis article focuses on the situation of elderly people in Japan and the recent changes in society.Japan's population is aging . During the 1950s, the percentage of the population in the sixty-five-and-over group remained steady at around 5%. Throughout subsequent decades, however, that age group...
- Labor unions in JapanLabor unions in JapanLabour unions emerged in Japan in the second half of the Meiji period as the country underwent a period of rapid industrialization. Until 1945, however, the labour movement remained weak, impeded by lack of legal rights, anti-union legislation, management-organized factory councils, and political...
- Lifetime employment
- Japanese work environmentJapanese work environmentMany both in and outside of Japan share an image of the Japanese work environment that is based on a lifetime-employment model used by large companies as well as a reputation of long work-hours and strong devotion to one's company...
- Japanese employment lawJapanese employment law- Employment Agreements :Under the Civil Code, a contract in which one person performs services for another with compensation may be construed as any one of the following:* an where the object is the completion of labor under the employing party's direction....