PUBLIC POLICY

Vol.34-No.09 September 1,1995

Research Report-Prospects and Tasks Related to Labor Supply and Demand

In response to requests from the Ministry of Labour, the Study Group for Employment Policy (Head: Prof. Shunsaku Nishikawa at Keio University) on July 5 published Projects and Tasks Regarding Labor Supply and Demand which worked out a plan for the nation's labor policy between now and the year of 2010. The report predicts that premised on public works investment and decontrol, the unemployment rate will stand at around 2.7 percent in 2000 and will rise from 2.8 percent to 3 percent in 2000 and beyond. It calls for "fostering workers who can respond adequately to industry which creates jobs and at the same time to improve an environment which assures smooth labor mobility." The Ministry will respond by working out the details of a concrete policy at the Employment Council, an advisory panel to the Minister of Labor, and by making up the 8th Basic Employment Measures Plan for fiscal 1995-2000.

Regarding future labor supply and demand, the report predicts greater labor demand at a given growth rate due to progress in shortening working hours and the growing ratio of employed persons in services which require more labor than manufacturing. The labor population will grow from 66.45 million in 1994 to 68.46 million in 2000; but with fewer children and the swelling ranks of the elderly, it will show the first decline thereafter, falling to 67.45 million in 2010. Gross domestic product (GDP) is expected to grow 2.6-2.9 percent to around 3 percent till the year 2000 and hover at 2.1-2.4 percent till 2010 based on the assumption that the Basic Plan on Public Works Investment will be implemented and structural reforms such as deregulation and rectification of commercial practices will progress. Labor supply and demand will be thus balanced in the year 2000, the report concludes. In 2000 and beyond, the supply of and demand for labor will tighten due in part to the shrinking labor population, but unemployment will likely rise because of a mismatch in labor supply and demand between sectors and regions, the report points out.

To respond properly to the changing situation, the report proposes such measurer providing more job opportunities, improving treatment in the context of wages and working conditions and assuring individual workers employment opportunities which enable them to have something to work for. More specifically, it is necessary, first, to foster people who will be able to produce higher value-added industries; second, to consolidate supply-demand adjustment for smooth labor mobility; third, to review the system of treatment of middle-aged and older persons; and fourth, to provide an aid system which allows for a balance between career and family.


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