White Paper on Labour 1996
-Outline of the Analysis-

Vol.35-No.10 October 1,1996

On July 2 the Ministry of Labour submitted its 1996 White Paper on Labour to a Cabinet meeting for publication approval. This year's white paper analyzes trends in the 1995 labour economy in Part I. Part II, titled "Coping with Structural Changes in Economic Society by Fostering Human Resources and Utilizing Their Abilities," points to the fact that fostering quality workers and utilizing individual workers' talents and abilities will grow in importance in the midst of changes in the need for quality human resources by companies and changes in the labor supply structure. Also, it examines the current state of and tasks for ability development efforts in Japan as well as consolidation of the conditions necessary for workers to fully display their hard-won abilities.

PART I Trends and Features of the Labour Economy in 1995

(1) Unemployment Rate
The unemployment rate in 1995 registered 3.2 percent, higher than the 1994 figure of 2.9 percent, and the number of unemployed reached 2.1 million. Both figures were the highest-ever recorded since the government began compiling these statistics (Fig. 1). Behind the rising unemployment rate during the current recovery phase, it seems to lie two combined factors: first, lack of labour demand, which is a facet of a boom-bust cycle, will continue over the long term; and second, the mismatch of the labour supply and demand is increasing.

(2) Ratio of Active Job Openings to Active Job Applicants
The ratio of active job openings to active job applicants dipped slightly in the middle of the year due to the stalled recovery in new job offers. The ratio turned upward again in the latter half of the year, but it stood at an annual average of 0.63, falling below the 1994 figure of 0.64.

(3) Number of Employees
Persons employed in 1995 increased by 270,000 over the year before, showing the smallest growth since 1975. By industry, 1995 witnessed a smaller growth in many sectors. In manufacturing, the number of employees continued to decline, illustrating a modest recovery in all sectors.

2. Trends in Wages, Working Hours, and Industrial Safety and Health

(1) Trends in Wages
In 1995, the growth rate of total cash earnings was up 1.1 percent from the 1994 level, showing a smaller growth than the 1994 rise of 1.5 percent, in establishments of 5 or more employees. This is due to a smaller growth of scheduled cash earnings and a dip in special cash earnings, such as bonuses, dispite a rise in the growth of non-scheduled cash earnings. However, mirroring stable prices, real wages rose 1.4 percent over the prior year from a 1.0 percent rise in 1994.

(2) Trends in Working Hours
In 1995, working hours at establishments with 30 or more employees totaled 1,909, a rise of 5 hours from the year before, the first slight increase in 8 years. Due in part to efforts made in the 1993-1994 period by many enterprises, smaller-scale ones in particular, toward shorter working hours, the scheduled working hours totaled 1,772, the same figure as the previous year. Non-scheduled working hours, meanwhile, increased 5 hours over the prior year to 137 hours, reflecting the modest recovery of the nation's economy.

(3) Trends in Industrial Accidents
In 1995, the number of industrial injuries (deaths and injuries requiring absences of four or more days from work) continued it's decline, totaled 167,316, a decrease of 8,731, or 5.0 percent down from a year earlier, showing a continued decline. However, the number of deaths rose to 2,414, an increase of 113, or 4.9 percent higher than the previous year, due in part to the effects of the January 17 Great Hanshin Earthquake.

3. Trends in Prices and Workers' Household Consumption Expenditures

(1) Trends in Prices
General consumer prices in 1995 dropped by 0.1 percent from the year before (the 1994 increase of 0.7 percent). This is the first decline since 1971, since when the government was able to make a valid statistical comparison.

(2) Workers' Household Income and Expenditure Trends
In 1995, workers' annual household income increased 0.9 percent in real terms, showing an upward turn from the 1994 drop. Workers' household real expenditures were down 0.7 percent in real terms, the third consecutive year-on-year decline.

4. Trends in Industrial Relations

In the 1996 spring wage negotiations, labor and management are expected to settle on the same or a slightly higher wage increase than in 1995 in both the amount and the rate. Major industrial unions in large enterprises accepted the following employee-based wage hikes: steel companies agreed on a 1.54 percent increase settlement; electrical machinery companies received a wage hike of 3.14 percent; auto companies settled for a 2.79 percent increase; and private railway unions accepted a wage increase of 3.19 percent.

PART II Coping with Structural Changes in Economy and Society through Human Resources Development and Utilizing Their Abilities

(1) Need for Human Resources Development
Japanese workers' vocational abilities have reached a high level thanks to a variety of human resources development in and outside the company as well as widespread education and higher education attainment. Now Japanese enterprises are expected to scramble for higher value-added manufactured goods and venture out into new field and more and more worker will belong to the white-collar worker group. New forms of development of vocational abilities will grow in importance that can response to these structural changes in the labor market including changes in each workers' vocational abilities such as creativity and specialized expertise, progress of informationization, the graying of the Japanese society and diversified forms of employment.

(2) Realities of and Tasks for Developing Human Resources
In the midst of rapid technological innovation, off-the-job training(Off-JT) programs, worker self-enhancement activities as well as traditional on-the-job training (OJT) programs are becoming increasingly important to nurture talented workers with sophisticated and highly professional skills. Among white-collar workers in particular there have visibly emerged moves to take part in self-enhancement activities as a means of individualized skill development. However, lack of time, need for large expenses, and a scarcity of information are a hindrance to workers' successful self-enhancement efforts (Fig. 2). Both enterprises and administrative bodies need to support an environment for workers self-enhancement activities and to study measures and policies for extending direct support to individual workers.

(3) Comparison of Japan's Human Resources
Development with that of the U.S. and Europe
The percentage of those participating in vocational training programs is on the whole higher in Japan than in the U.S. and European nations. Furthermore, Japanese enterprises characteristically provide education and training programs to virtually every level of workers (Fig. 3). In the U.S. and Europian countries, a variety of support systems and qualification systems have been developed to foster quality workers. The percentage of those age 25 and over who enter colleges and universities is high, and corporations vigorously utilize public organizations, including universities and colleges. Among facilities targeted for white-collar workers, business schools and community colleges are especially helpful in Japan for promoting the continuing education of white-collar workers.

(4) Response to Technological Innovation
Human resources development of researchers and engineers is vital for enterprises to push ahead with the high value-added nature of products and venture into new fields. In the years ahead, exchange of personnel between companies and dispatch of engineers to academic research institutions, such as universities and graduate schools, will also be important. What is more, diversified career paths offer to reseacher and engineer will be necessary. In addition, along with technological innovations such as those in microelectronics, skilled workers in production line are expected to be more sophisticated and multi-skilled. To this end, it is also essential to develop their vocational abilities and improve the way skilled workers are treated.

(5) Progress in Informationization
and Tasks for Human Resources Development
Along with progress in informationization, workers are expected to have new abilities: the ability to collect and process information in general jobs, and the ability to analyze information and organize operation in response to informationization in middle-management jobs. Also, it is essential that in the years to come, training institution outside the company, such as public Human resources development facilities, will be offered as a forum for corporate education programs in respose to informationization. Educating middle-aged and older employees or informationization is also a major task that enterprises must tackle.

2. Creating an Environment for Utilizing Workers' Skills

(1) Importance of Skill Utilization
Structural changes in labor supply are continuing, such as the further aging of the labor force, women's advance into the job market and the changing consciousness regarding work particularly among young persons as evidenced by the waning tendency for the single-company, single-career path and a growing tendency for having a field of expertise. Amidst these changes in labor supply, there have emerged problems associated with utilization of workers' skills, such as the high job turnover rate among young persons, few job opportunities available that meet the employment needs of women and a strong sense of labor excess among middle-aged and elderly persons. Furthermore, amidst the changing industrial and occupational structure in future years, the role of labor mobility between industries and companies, will be likely to increase in order for workers to have a place in which they fully can demonstrate their skills.

(2) Enabling Different Types of Workers to Demonstrate Their Skills
Coping with tasks associated with employment management is necessary to enable different types of workers to display their skills. The rising tide of job separations and job changes among young people is sometimes ascribable to their inadequate attitudes toward work during the short period of job-hunting and to corporate employment management that does not match the change of young persons' work consciousness. Furthermore, in order for women to be able to demonstrate their abilities, it is necessary to flexibly utilize individuals in response to their desires and abilities and relieve them of heavy domestic burdens. To fully utilize the skills of middle-aged and older persons, efforts should be made to secure them a place in which they can be active, by reviewing the organizational setup and introducing a system which allows middle-aged and elderly workers to be treated properly in a manner other than by just offering them management positions.

(3) Toward Realization of Stability for Workers' Lives
The country's enterprises are under pressure to review the employment system amidst the recent rapid changes in economic society. In response to this situation, some companies have adopted a personnel management system based on skill and performance. What is important about adoption of the system is appraisal and evaluation of the worker's skill and performance. Thus, it is necessary to establish rules with a dialogue between labor and management as a base and to implement them in a fair and just manner, in order to create an environment which enables workers to work with ease.(Fig. 4)

(4) Tasks for Consolidation of the Labor
Market that Responds to Greater Labor Mobility
The following may be pointed out as problems arising from job changes. When older workers switch jobs, they are more likely to receive smaller salaries or lose jobs. Also, the gap in welfare provisions between sizes of companies and the system of welfare provisions could constitute factors likely to work against job changing (Fig. 5). Furthermore, in order to cope with the mobile workforce which is predicted to be greater in the years to come, the following tasks should be addressed: first, strengthening the nation's supply and demand adjustment functions; second, consolidation and substantiation of objective work skill indicators; and third, the need to study consolidation of a job environment immune to a mobile workforce.

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Summary of White Paper on Labor Index