(Preliminary translation)
Main Points
December 1999
Economic Planning Agency
Government of Japan
This is the provisional translation of main points of Kokumin Seikatsu Hakusho, which was submitted to the Cabinet on December 10, 1999. This paper is intended to introduce the primary ideas. For quotations, please refer to the White Paper written in Japanese.
Working practices have drastically been changing, following population aging with the number of birth shrinking, economic maturing, and economic globalization. Companies once played an important role to warrant people's living. But that guarantee has gradually weakened, so that people are now beginning to worry about living security.
The postwar society could be characterized as a job-linked society based on production. The desirable society from now will be a society with flexible job opportunities where people are able to choose the best liked job from many alternatives to make their lives more enjoyable.
Deepening knowledge and improving skills are essential in the coming economy where self-independent individuals will be the main players, while social safety nets should be built to cope with the new situations. Human resource enhancement will be one key to maintain job security. Moreover, job creation, including entrepreneurs and the spread of job information, are important to expand opportunities for people to work in a preferred workplace. To this end, the government needs to provide measures for enhancing human resources to facilitate the social change.
People will be able to benefit from a higher quality of life by obtaining income in an enjoyable manner when they learn to acquire skills and to choose a job and workplace that are best suited for their taste and ability, and by making efforts to improve their manpower further.
Part 1: For Lively Working under Changing Practices
Chapter 1: Changing Working Practices and Lifestyles
Chapter 2: Mounting Needs to Strengthen Human Resources
Chapter 3: Tasks for Enhancing Human Resources
Chapter 4: Making Working Life and Healthy Family Life Compatible
Part 2: Consumption/Saving Behaviors and Human Resource Expenditures by Households
The gradual trends toward meritocracy in wages and diversified recruitment are two major changes in working practices. On the one hand, they may offer new opportunities for female workers, the elderly, and handicapped people. On the other hand, they are a source of worry for many people regarding the adequacy of their knowledge and skills in benefiting those changes.
Changing working practices have resulted in new trends in lifestyles: diversifying working-styles including the fading sense of a company-person, and an active increase of the study time for improving human resources.
Younger generations in their 20's and below tend to change jobs more frequently. Furthermore, those who do not take a fixed job have also increased. On top of that, jobless young people with bachelors and post-graduate degrees rose rapidly, to 280,000 in 1997, the highest number in postwar history.
Job mismatch has been worsening, while unemployment remains high. The most widely shared reason for unfilled posts in companies is that the skills and experiences of applicants do not satisfy the qualifications of the posts. This indicates a mismatch between human resources demanded by companies and those of applicants. Enhancing job skills is needed to help alleviate such mismatches.
Such needs are summarized as follows. First, higher manpower enables the easing of mismatches in the labor market.
Second, strengthened human resources bring about not only more contributions to the incumbent companies but also better prospects for job changes.
Third, enriched talents play an important role in fostering entrepreneurs.
Fourth, globalization indicates that it is desirable for the Japanese economy to have a comparative advantage over products with skilled labor, contributing to world economic development.
The number of companies that intend to emphasize meritocracy has been increasing. They will gauge wages based on the evaluation of workers' skills and achievements. More than 60 percent of individuals accept this idea, according to a poll.
However, about 20 percent of people consider the change from seniority wages to meritocracy undesirable. The reasons for opposition are a doubt for fair personnel evaluation, and a loss of willingness to work in case of workers with low grades.
Around 70 percent of people agree with the idea that individual efforts result in differentials in income and other aspects. On the other hand, less than 10 percent of people do not agree.
Facing a spread of meritocracy, 90 percent of younger generations between 20-39 years old think positively toward resume education in schools. Companies expect universities and post-graduate schools to foster human resource development. In reality, the number of working people who enter master's programs rose as sharply as five times from a decade ago. They were 5,200 people, amounting to nine percent of admitted students in 1998.
About 60 percent of juniors in universities are interested in foreign companies and their affiliations in Japan, because they think those companies offer valuable chances to improve their skills and to fully exert their potential. Half of newly recruited workers hope to be placed in posts where they are able to undertake good training for specialists, not for generalists.
A program called internship has been introduced to university students to experience an actual job in companies for a certain period, which are relevant to their major and future career orientation. About 40 percent of companies are interested in such programs. It is expected that further deepening of mutual understanding between students and companies will create a new way for recruitment of new grads.
First, while 90 percent of individuals realize the need to strengthen their human resources, only half of them have tried to. The reasons are, in most cases, "too busy," and "too expensive."
Second, expenses in universities, graduate schools, and professional schools are, in particular, felt to be burdensome by working people who take those courses. It is needed to provide supports to individuals planning to receive vocational training of high quality.
Third, information literacy in Japan should be enhanced further. Companies are seeking human resources with strong backgrounds in information technology. Home offices with information equipment are expected to help make family life and working life compatible. These examples show the importance of obtaining such literacy.
There are other relevant issues.
The business-opening ratio in Japan is quite low compared with other industrialized nations. Among self-employed people, there has been a remarkable decline in people age 45 and below. Business education in higher level of schools such as universities is indispensable to augment entrepreneurs. The number of younger generation who wish to become an entrepreneur is noticeable, especially those in their 20s and 30s. This implies that good prospects exist for entrepreneurs to grow when the information skills to be utilized in SOHO (small office home office) environments, in particular, are enhanced.
Utilizing the Internet necessitates an improvement of English language ability. Schools are expected to play an important role in information education. However, only 36 percent of public schools (primary, secondary, high and special schools) in Japan have been linked to the Internet, while that ratio is 89 percent in the U.S. At the same time, teachers who are able to manage a class with computers are no more than 20 to 30 percent of the total.
Higher wages are paid to specialists with an advance command of information literacy. Also, when new job takers are compared, the information service industry pays higher salaries than all industry average to workers age 35 and over. Therefore, obtaining information literacy would be advantageous in an occupational change.
Chapter 4: Making Working Life and Healthy Family Life Compatible
Employment styles will further become diversified in the coming economy of self-independent individuals. It is projected that the number of part-time workers and dispatched workers will rise as such styles facilitate making working life and family life compatible. It is necessary to accommodate this trend through various measures for improved welfare of these workers concerning, for example, job stability and vocational training.
A significant number of female workers quit a job voluntarily for the sake of elderly home-care: one out of 10 in their 40s, and one out of seven in their 50s. Among those who practice elderly nursing care to their family, 80 percent of men maintain a job. However, the share of women keeping a job is as low as 40 percent.
When workers face the need to take care of their elderly relatives, about half of them cope with the situation by taking ordinary paid leaves. It is expected that the elderly nursing insurance system and the elderly nursing leave system will help to make working and nursing compatible.
Household attitudes shocked by the failures of financial institutions seem to have stabilized since early 1999. Deposits saved at banks for an average household are sufficiently secured by the existing deposit insurance system. As for life insurance, which is the second largest in household financial assets, next to bank deposits and postal savings, contracts with pension benefits have been increasing.
Households have been spending saliently more money on information and communications. This is one evidence that households are making efforts to improve their human resources.
Companies used to be a source of living safety, by warranting security to employees. However, that is mostly no longer true. Many do not stick to the lifetime employment system, while the merit system is spreading gradually. People are beginning to worry about these changes in working practices and are becoming cautious of those consequences.
The unemployment rate has risen sharply, with job mismatches expanding. The employment situation, in particular, of white-collar workers is extremely severe. As there is a mismatch in vocational skill between job offers and seekers, the easing process of mismatches is rather slow. This suggests that people should improve their human resources in line with the new economic environment by deepening their knowledge and brushing up their skills.
People have widely shared the sense of a need to strengthen their human resources. But they tend to face problems like "too busy to find a time," "too expensive," and "unsatisfied with training contents." In the U.S., community colleges have played an important role in improving human resources. It is important to support people who are hoping for self-improvement, as the U.S. case offers a good example. This support will greatly contribute to fostering entrepreneurs in the end.
What is needed is a strategic decision by individuals to improve their human resources, which is reasonably consistent with each prospective life and career plan. One of the judging standards would be whether the ability in question is demanded in the society; does it offer benefits, and is it attractive?
Strengthening human resources is an indispensable infra-structural element for economic vitalization. Enhanced human capital is fundamental to improve the quality of life. In this sense, it could become a social safety net in the economy. Human resource improvement should go in tandem with the provision of social overhead capital, whose aim is also to raise macroeconomic productivity. One urgent task in human capital is to strengthen information literacy, including ability of English language, and to stimulate the entrepreneur spirit.
It should be noted that the focus on human resources does not mean to weaken the importance of the social security system. It takes time before the improved human capital results in noticeable economic effects. This is normally a medium-term process. Therefore, the social security system, which is to be stable and efficient, remains the core of living security to people who are exposed to risks beyond their reach.
More and more people intend to fully exercise their potential within their daily time constraints. This trend is reflected in the rise in part-time workers and dispatched workers. As they are aiming to make working life and family life compatible, they must be provided with well-designed policy supports. At the same time, measures are essential to enable people to make working and elderly-family care compatible.
Equal opportunities should be guaranteed to all people in education and vocation. Handicapped people need to have opportunities to improve their human resources properly depending on their conditions and to participate in society on their own will. Furthermore, lest younger people stay in the unemployment pool for a prolonged period, measures are important for the younger generation to obtain contemporary working knowledge and skills.
It is natural in a sense that changing working practices are causing people to feel uneasy and cautious. It is an important government duty to lessen uncertainties as much as possible, especially those beyond the reach of individuals. When people become confident of their human resources by making positive efforts to improve them, a higher quality of life will result from individual decisions to be made in an evolving environment.
figures
(Figure number is taken from the white paper)
| Figure1-1-4 | Declining share of companies with the lifetime employment |
| Figure1-1-9 | More people have felt insecured about employment without a fear of jobless |
| Figure1-1-11 | Annual income declines after one loses a job |
| Figure1-1-15 | The upper limit is around age 35 for jobs offered by companies |
| Figure1-2-1 | Rising share of companies with the merit system on the prospective principales of labor management |
| Figure1-2-2 | Over 60 percent of people favor the merit system of wages |
| Figure1-2-4 | People are becoming less satisfied with the situation such that making efforts are rewarded |
| Figure1-2-12 | More recruitment opportunites for non-new university grads |
| Figure1-3-4 | 70 percent of people spend less than 50 thousands yen per year for voluntary self-enlightenment |
| Figure1-3-11 | Many younger people hope to become entrepreneurs |
| Figure1-3-18 | International comparison on the merits of advancing information technology |
| Figure1-3-21 | Steeper wage plofiles of system engineers than average |
| Figure1-4-2 | Rising share of part-time workers in Japan |
| Figure1-4-6 | Requests concerning worker dispatching,1997 |
| Figure1-4-9 | Incidence and places of elderly care |
| Figure1-4-12 | Half of workers are practicing elderly care to their family by taking paid leaves |
