Enactment of the government¡¯s work-style reform legislation by the Diet in June heralds the start of labor reform. The bill is part of a wider work-style action plan that includes measures encouraging people to design their own careers, redirect human capital to where it is best used and revitalize Japan¡¯s economy.
What are the unintended consequences of rising workforce mobility? Labor economist Munetomo Ando, a professor at Nihon University, helps answer the question.
Few people realize that today¡¯s inflexible markets result from severe labor shortages existing in postwar Japan, Ando explains. The unemployment rate during the 1960s was well below today¡¯s 2.4 percent, reaching a record low of 1 percent in November 1968. To attract and keep staff, firms offered school-leavers lifelong jobs. Young inexperienced workers landed jobs that provided training, while skilled workers enjoyed job security they craved. Unemployment fell to low rates compared with other OECD nations.
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