The Labor Market and Lifetime Employment in Japan

Abstract

Japan's labor market and unemployment are more similar to those in Western economies than is usually understood in the West. Inclusively measured unemployment levels are well above the official rate. Recession, a strong yen and changes in world markets are changing the structure of management and employers' obligations to employees. Lifetime employment, historically limited to men in large companies, is being weakened. Women, older workers and employees in smaller firms were never part of this arrangement. Japan's enterprise unions are not able to resist these changes. Restoring full employment in Japan will require new public policies to limit employers' ability to reduce employment, especially in smaller firms. Legislation is needed to reduce hours of work, and protect women, older workers and young workers who are at greatest risk.