In September, Prime Minister Shinzo Abe announced that the government’s economic goal is to boost gross domestic product to ¥600 trillion in 2020. Most members of the business community have called this target impossible, since it would require an annual growth rate of 3 percent, and the last time Japan achieved that figure was in 1991.
Japan would have to add ¥110 trillion to its economy to achieve the government’s target, and to do that Japan needs to add several million people to the workforce. Earlier this month a government panel of academics and business leaders recommended that the ruling Liberal Democratic Party accelerate the planned ¥18 yearly increase in the minimum wage. The conventional wisdom about raising wages is that it tends to reduce employment, though in the United States there have been recent examples that seem to contradict this economic truism. Some companies in Seattle, for instance, have already raised their hourly wage to $15 an hour ahead of a local law that sets that amount as the minimum wage for “large businesses” within the next four years, and unemployment has actually gone down, though some economists say it has nothing to do with pay.
In any event, there’s no way Japan can boost GDP without expanding its workforce. The good news is that there is a surplus of job openings compared to the number of job seekers. The bad news is that there is a mismatch between the positions available and the people who are looking for jobs. In many instances it has to do with training or experience. There are not enough people with the skills necessary to fill many of the empty positions. A bigger problem is that the available jobs are not the kind that the majority of job seekers want, because of either the nature of the work or the employment conditions.
An article in the Sept. 28 issue of Toyo Keizai explains that construction and social welfare are the fields that need workers the most. Building and public works projects started decreasing in number in the late ’90s, and as older workers retired, fewer new ones were hired and trained. Since the Great East Japan Earthquake of 2011, construction demand has increased, but there is a serious lack of skilled workers. The labor ministry estimates that at the moment the industry needs another 500,000, and since more than 20 percent of the current construction workforce is over 60, a decade from now the shortage will expand to 1 million unless more workers are added in the meantime.
In the social welfare field — nursing, caregiving, day care—the welfare ministry projects that 2.53 million people will be needed by 2025, and that at the current rate there will only be about 2.15 million. The main problem is low pay and the demands of the job, which combine to result in high turnover. Caregivers quit because they don’t think the remuneration is worth the hard work.
Besides, there are other jobs available. Another field suffering from a shortage of labor is delivery services. More than 100,000 drivers are needed nationwide, and courier companies target caregivers since many caregivers have to travel to patients’ homes and thus already have drivers licenses. These companies also know that caregivers tend to be frustrated with their work, and while they don’t necessarily pay them more, the work is relatively easier. In this situation, however, workers are simply being moved from one field to another. They aren’t adding to the total workforce, so the overall economy doesn’t benefit.
Another problem is so-called career blanks: workers who have skills but leave the job market for personal reasons and don’t return. The Labor Policy Research Center estimates there are something like 10 million career blanks in Japan. A fair portion are nurses who quit to get married and have children and decide not to return to work afterward. Another difficult demographic is men or women who quit their regular employment to care for elderly parents full-time, but because they tend to leave their jobs in middle age, their prospects for re-entering the job market are low.
In a Reuters survey of major Japanese companies, 76 percent supported the idea of “using foreign laborers,” but the government has consistently resisted the call to allow more immigrants into Japan to fill labor needs. Consequently, it will have to persuade more Japanese to enter the workforce, and the only demographics available in any large numbers are women, the elderly and disabled persons. Abe is now advocating a program that will help workers whose parents require extensive care so that these workers don’t have to quit their jobs but, more significantly, the government should encourage companies to hire and even retrain middle-aged and retired people who don’t work at the moment.
But it’s women who could make the biggest difference, especially in fields that require manual labor, like construction. The problem is mainly structural, despite the government’s claim that it is giving more women opportunities. Ever since equality in the workplace was guaranteed by law in 1985, women have been channeled into nonregular employment though revisions in the labor laws that satisfy corporate demand for cheaper workers. Right now, 70 percent of all nonregular employees in Japan are women.
On the one hand, many of these women are homemakers who only work part time and purposely limit their hours so that they don’t make more than ¥1.03 million a year. If they make above that amount, they no longer qualify as dependent exemptions for income tax purposes and will also lose their type 3 status, meaning they will have to start contributing to social security plans.
On the other hand, women who do want to work full time disproportionately prefer office work. According to the Mitsubishi UFJ Research Institute, there are 3.24 million women looking for regular employment and 1.22 million looking for part-time employment as ippan jimu (general office workers), but there are only openings for about a quarter of these women, which means 3.35 million won’t be able to secure their “desired” positions.
The trick is to somehow channel this huge labor potential into fields that are desperate for workers, but that will take a concerted effort on the part of government and industry to not only retrain these women and make pay and working conditions more attractive, but also to convince them that women can be just as effective as men in jobs that men have traditionally filled.
Yen for Living covers issues related to making, spending and saving money in Japan on the second and fourth Sundays of the month. For related online content, see blog.japantimes.co.jp/yen-for-living.