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For over ten years, Japan has been mired in economic stagnation and recession. Fiscal spending has drained government coffers, leading to huge deficits and worrisome levels of external debt. Political parties and the bureaucracy have been plagued with scandals. Though the rise of reformist Prime Minister Junichiro Koizumi leaves many hopeful, Japan faces many challenges. The International Monetary Fund (IMF) predicts a record-high 5.3% unemployment rate for 2001, and economic growth is projected at a paltry 0.6%.

Because of these economic difficulties, Japans jobseekers face a much different environment today than they did in previous decades. The much heralded lifetime employment system is fraying, and many young, bright jobseekers are looking for non-traditional employment opportunities with entrepreneurial or Western firms. Though finding a job can be exceedingly difficult, many young people, especially women, welcome the new environment and the opportunities it brings. However, older workers are bewildered at the pace of change (glacial by US standards) and frightened at the prospect of a broken lifetime job covenant and the looming possibility of unemployment. In sum, this is a tumultuous period for Japan in many respects, including recruiting and human resources issues. However, the environment also offers new opportunities, both for Japanese jobseekers and for foreign employers.

Young job seekers face unemployment, opportunities

The unemployment rate for males under 25 has remained near 10% for almost two years, and although these figures have improved slightly, youth unemployment remains a serious, continuing problem in Japan. The number of high school graduates without job offers is indicative of the youth unemployment problem. Traditional manufacturing and other "old economy" companies that usually hire high school graduates are hiring fewer now, which is affecting the employment of young people. To compound this phenomenon, hiring of university and junior college students is down markedly; the number of college graduates who received job offers hit a record low in 2000.

While these statistics are troubling, it is unclear whether they hold true for all sectors of the economy. Demand remains high for those with high-tech, IT, or other technical or computer backgrounds. Furthermore, there is growing evidence that young people's attitudes about employment may be changing. Many talented young people are looking for "interesting" jobs and are shunning companies that traditionally were held in high esteem. In essence, the nations best young people, who once went into government and major companies, are now joining high tech and foreign ( U.S., Canadian, and European) companies. These companies are able to attract young men and women looking for challenging opportunities not offered to Japanese companies, and in many instances offer a more pleasant work environment. For young workers, the possibility of stock options, an exciting job, overseas travel, a collegial atmosphere and performance-based compensation is particularly welcomed.

A difficult environment for older workers

Older workers face different problems in this environment. Japans decade of economic difficulties has placed enormous pressure on companies, straining the traditional lifetime employment system. Surveys offer conflicting evidence: while one recent survey showed that only 10% of employers highly value the lifetime employment system, another study indicated that over 50% of Japans companies would prefer to retain the lifetime employment system, regardless of business results. Job security is increasingly an issue for older Japanese.

Some employers are explicitly lowering the retirement age from 60 to 55, then 55 to 50, then 50 to 45 and in some cases even as low as 40. In fact, in Japan older generally refers to those over 45 years of age, hardly old by Western standards. Japan has no age discrimination law, but does have fairly strict workplace laws making it difficult to dismiss workers. However, companies have ways of making their desires known to their employees. Companies have been known to lower employees titles, decrease salaries, change job assignments and/or descriptions, and move personnel from normal office surroundings to unpleasant ones, as in a vacant or basement area. Japanese culture frowns on disputes, litigation, and confrontation, so instead of complaining, most employees faced with these situations get the hint and quit.

As a result, older workers are particularly vulnerable. Those who are forced to leave their jobs find the job market for older candidates exceedingly tight, even in the best times. Despite the difficulties some young Japanese face in finding employment, almost all job postings are for people aged 20-40. Those positions available to "older" workers are often in such categories as security personnel and taxi drivers.

Demographic Transition: An opportunity for change?

Though Japan faces unemployment problems in the immediate future, other problems loom on the horizon. Japans birthrate has been falling for decades, such that in 2020 there will be only two workers for each retiree (the current ratio is over four to one). This is a problem not only for Japans pension system, but also for Japanese companies, which will face a severe worker shortage if new sources of labor are not found.

One potential source is retirees. Some Japanese employers are already offering short-term contracts for specific tasks to exceptional former employees. This enables companies to meet specific needs without the burden of a long-term commitment to new employees. Large companies such as Matsushita Electric Industrial Co., Hitachi Ltd., Toshiba Corp. and Fuji Electric Co. are have implemented or are considering such arrangements.

Disabled workers are another potential labor source that up until this point has been ignored. In Japan, it is considered culturally impolite to expose the public to disabled persons. In fact, in the past, even pregnant women kept out of sight, though in present-day Japan this is no longer the case. Although there are still very few disabled Japanese workers, their numbers are increasing, and Japans Ministry of Labor has stepped-up efforts to support the disabled in their efforts to join the workforce.

Finally, projected worker shortages may finally open doors to Japanese women, whose careers have traditionally been held back by Japans paternalistic society. Every workplace problem for women in the U.S., including discrimination in recruitment, hiring, salary, the glass ceiling and harassment, is an even greater problem in Japan. Japanese women at large companies are often kept off the professional track entirely and relegated to clerical roles. For these and other reasons, in recent decades many ambitious Japanese women traveled abroad to the U.S. and elsewhere for higher education. Once their education is complete, many do not want to return to Japan to face an openly male-centered work environment with restricted growth opportunities. Instead, many remain in the West, or return to Japan only to work for Western or non-traditional Japanese companies. Japan cannot afford to continue to ignore these workers, especially since many of these women have valuable training in high tech areas, which is critical to Japan's future.

Conclusion

In the months and years ahead, Japan will continue to face economic difficulties. There is hope that the new government will be able to enact reform, but Japans problems are many, and they have strong implications for labor and human resources issues. Though unemployment remains a problem at present, the future will be marred with worker shortages unless employment practices in Japan change. The Japanese are very slow to change their traditional social and business practices, but change is taking place. Thus, it is important to keep carefully focused and up to date on the employment practices of this, the second largest economy in the world.

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