Top Picks || Arts & Entertainment || Business & Economy || Education & Society || Science & Technology || Sports & Fashion || Search || Back Numbers RECORD UNEMPLOYMENT: A Cloud of Anxiety Looms Over Japan's Work Force July 31, 1998 Japan's employment situation is rapidly deteriorating. According to a survey by Japan's Management and Coordination Agency, the unemployment rate rose to 4.1% in April 1998, exceeding the 4% level for the first time since the period of upheaval immediately following World War II. In May, there was no improvement, making Japan's unemployment rate virtually on par with that of the United States. In addition, the number of people falling into the ranks of the unemployed involuntarily due to bankruptcies and corporate restructuring has jumped, indicating that Japan's depressed economy has begun to affect the employment situation in earnest. Layoffs on the Uprise For much of the postwar period through the early 1990s, Japan maintained an impressive record of near full employment, with its jobless rate hovering at a mere 1%-2%. Beginning in 1993, however, the job market began to feel the repercussions of the collapse of the bubble economy, and by 1995, unemployment had climbed to 3%. The rate began rising again in 1998, breaking through the 4% benchmark in April. The statistics for May show that the number of unemployed male workers increased by 400,000 over the same period the previous year to 1.76 million. For female workers, the number rose by 90,000 to 1.17 million. As a result, the male unemployment rate climbed to 4.3%, while the female rate stood at 3.9%. The number of employees losing their jobs due to layoffs and corporate bankruptcies increased by 350,000 to 870,000. Among industrialized nations, Japan's unemployment rate is considerably lower than the double digits that plague Germany and France but is roughly level with that of the United States, which in May dropped all the way down to 4.3%. The Collapse of the Lifetime Employment System Major Japanese corporations up to now have founded their hiring practices on a system of lifetime employment and have made employment security a top management priority, even when this meant keeping surplus workers on the payroll. The rising unemployment rate indicates that corporations are losing their capacity to support this surplus. Until now, large corporations have attempted to cut labor costs by limiting salary increases and paid overtime. The most common means of cutting staff size has been through attrition and reductions in new hiring. These measures may no longer be enough. Recently, companies have begun resorting to more direct means of employee reduction, such as by adopting voluntary retirement programs and laying workers off. The result has been a record number of out-of-work Japanese employees. Moreover, due to sluggish domestic demand and Asia's economic turmoil, companies listed on the Tokyo Stock Exchange collectively closed the books on the fiscal year ending March 1998 with their first drop in earnings in four years. A considerable number of corporations finished the year in the red. These companies will need to undertake further restructuring measures to survive amidst stiffening international competition. As such, there is a high probability that more layoffs will be forthcoming. The high unemployment rate has also put a damper on Japanese consumer spending, knocking even more wind out of the economy's sails. The government responded in June with a special meeting of its employment policy committee, consisting of all cabinet members, for the first time in two-and-a-half years in an all-out effort to work out new plans to secure job opportunities. The proposed measures include stepped-up public works spending in localities where employment is down and financial support for venture businesses, which are expected to employ an increasing number of workers in the years to come. Aside from the country's current downward economic spiral, structural changes in Japan's business and society, such as the internationalization of the economy, the aging of the nation's population, and changing attitudes toward work, are also at the root of Japan's present employment concerns. One thing that is unlikely to change, however, is the deeply ingrained belief in employment security as the foundation of economic and social stability. Right now, the most vital reforms for the future of Japan's employment market are those geared at making this kind of security, once taken for granted, a reality again. Back to Main Index Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government. Ministry of Foreign Affairs   Japan Information Network