Japan ‘creating sub-class of poorly paid
By David Pilling in Tokyo
Published: January 23 2005 22:03 | Last updated: January 23 2005 22:03
Huge changes in Japan's labour market are creating a dangerous divide between well-paid, well-trained workers in permanent employment and a sub-class of poorly paid workers with low skills and fragile job security, the Organisation for Economic Co-operation and Development has warned.
The report, which makes calls to tackle deflation and assert fiscal control, highlighted the downsides of greater labour market flexibility.
“Employment flexibility is being achieved through increased percentage of non-regular workers”, whose numbers had sky-rocketed from 19 per cent to 29 per cent of the total workforce in a decade, it said. Temporary staff earned about 40 per cent as much as regular workers. “The increasing dualism is creating a group, concentrated among young people, with short-term employment experience and low human capital.”
The OECD's concern chimes with growing concern within the Japanese government that the postwar employment model is dying but has not been replaced by a tenable alternative.
One government official said the suicide rate had not fallen since Japan's economic recovery began three years ago, a phenomenon he attributed to greater despair caused by the collapse of the old labour market system.
The Bank of Japan recently issued a report on labour market changes, which it said were partly responsible for persistent deflation, which is now into its seventh year.
Wages have continued to fall in spite of three years of economic recovery, interrupting a transmission mechanism by which greater economic activity normally feeds through into higher prices.
This weekend, the government produced a draft of a report, Japan's Vision for the 21st Century, in which one of the main recommendations was to change pension and other laws to make it easier for workers to move between jobs.
It also recommended making it easier for women to work full-time and for people to work until 75.
One of the OECD's main concerns, according to Randall Jones, the OECD's chief economist for Japan and South Korea, was that labour flexibility was being introduced in only one part of the market, creating an unbridgeable divide between workers in non-regular and regular employment.
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