Unemployment
Rate
Japan's unemployment rate remained below 2% until the mid-1970s,
but then slowly began to rise, reaching 2.8% in 1986 and 1987
as Japan's economic growth reached a plateau. Although the jobless
rate declined thereafter, it started edging back up after the
bubble economy collapsed in 1991. In 2003, it averaged 5.3%,
down 0.1 percentage point from the record high set in 2002 and
the first improvement in 13 years. The number of unemployed
persons decreased 90,000 over the previous year to 3.5 million.(*1)
The number of young people without regular jobs is growing,
posing serious concerns for Japan's future. Among Japanese aged
15-24, the average unemployment rate in 2002 reached 9.9%, nearly
double the overall jobless rate. In order to help young people
develop job skills and clear career plans, the Ministry of Economy,
Trade and Industry, in a tie-up with
other government agencies, plans to launch a program in fiscal
year 2004 to encourage more young people to take permanent jobs.(*2)
The program is designed to create 1 million new jobs over three
years from fiscal 2004.
Changing Structure
The postwar Japanese employment system, characterized by such
features as lifetime employment and seniority-based wage systems,
is changing dramatically as economic stagnation drags on and
the business environment changes drastically. There is an increasing
tendency for companies to slim down their workforce, a trend
that tends to increase the proportion of part-time employees.
In 2002, 1.15 million people lost their jobs due to restructuring
or bankruptcy, while the ratio of part-timers in the labor force
(including staff from "temporary" agencies) reached
24.8%.(*3)
Japan's wage system has traditionally been based on years of
service in one's company, but a growing number of companies
are beginning to take performance and aptitude into account.
According to the Ministry of Health, Labour, and Welfare statistics,
28.8% of firms with 1,000 employees or more in 2002 had an annual
salary structure based on performance, up from 15.9% in 1996.(*4)
Apart from a period of hefty wage hikes during inflation on
the tail of the first oil crisis of 1973, wage increases in
Japan have been relatively moderate. After the burst of the
bubble economy, wage increases have become even smaller, and
in 1998 Japan saw the first negative wage growth of—1.4%.
In 2002, monthly wages in all industries decreased again by
an average of 2.3%, the sharpest drop ever.(*5) In such severe
economic conditions, recent labor-management negotiations tend
to focus on securing employment rather than increasing wages,
and some large companies and labor unions have started to discuss
the issue of "work sharing."
The average starting monthly salary for male college graduates
in 2002 was ¥198,500, a rise of 0.1% over the previous year
(¥188,800 for female college graduates) and that of male
high school graduates was ¥157,500, a decrease of 0.4% (¥148,800
for female high school graduates). The growth rate of starting
salaries has remained low since it dropped to less than 1% in
1995.(*6)
For many years, Japan has grappled with the issue of reducing
the length of the workweek, which has been longer than in Europe
or the United States. The 1987 revision of the Labor Standard
Law reduced the legal workweek from 48 to 46 hours in April
1988. The length was further shortened to 44 hours in 1991 and
to 40 hours in 1997. A Ministry of Health, Labour, and Welfare
survey shows that average annual working hours, including overtime,
of workplaces employing 30 or more persons in 2002 was 1,837
hours.
As of January 2002, only 33.7% of companies had a five-day workweek
in effect, in contrast to 70.6% of corporations with 1,000 or
more employees. Another issue is that of encouraging workers
to take all their paid vacations. The average number of days
taken off in 2002 was 8.8 days, which amounts to only 48.4%
of all the paid vacations actually offered.
Labor Relations
According to a survey by the Ministry of Health, Labour and
Welfare, 10.5 million workers in Japan were organized in unions
as of June 2003. The percentage of workers belonging to a union
plunged to a record low of 19.6%.(*7) The ratio of organized
workers has been declining since the mid-1970s. The main reasons
are a drop in the number of people with full-time employment,
caused by the current recession, and a rise in the number of
part-time workers, who are less likely to join a union.
Unions in Japan are usually formed within a company or a company
office or plant, a practice known as the enterprise union system.
Labor-management relations, therefore, have been relatively
stable.
Approximately 7.2 million, or two-thirds, unionized workers
belong to unions that are members of Rengo (Japanese Trade Union
Confederation). Rengo was originally formed as the Japanese
Private-Sector Trade Union Confederation in 1987.(*8)
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