Question

Explain recent characteristics observed in Japan’s labor market. How can we evaluate unemployment rate and labor participation rate? Do you think any problems still exist in the labor market and how should we solve?

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Answer 1

Ans ) Japan has one of the lowest unemployment rates globally. Business survey continue to indicate significant labour shortages and the working age population is no longer growing. Given the demographic in Japan the labour force is not growing at the fastest pace since the 1990s. In fact it is shrinking. Labour force growth consists of population growth and the growth in the labour force participation rate (LFPR). Assuming a constant LFPR within age cohorts a stagnant and aging population should be generating a negative labour force growth rate. In reality the labour force is growing just under 2% per year. Japan needs to tackle challenges of structural issue of declining birthrate and aging population. Aiming at building upon policies towards a positive cycle of growth and distribution and realizing an inclusive society for all , PM has introduced 3 target called three arrows: a robust economy that gives rise to hope , dream weaving childcare supports and social security that provides reassurance. The economy has been sluggish for more than two decades by simultaneously implementing the policy mix "three arrows" consisting of (1) aggressive monetary policy to dispel the deflationary mindset (2) flexible fiscal policy to ignite the dampened economy and (3) new growth strategy to restore the confidence of business and people and translate the "expectations" into the "action".