Annual Report on

The Japanese Economy and Public Finance


- Japanese Economy Heading for New Growth Era

with Conditions for Growth Restored -

Cabinet Office

Government of Japan

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Chapter 3

Changes in Environment in the Household Sector and Challenges toward the Strengthening of Human Potential

Key Points of Chapter 3

Section 1 Changes in employment styles and their impact
- During the current phase of the economic recovery, diversification in employment styles, such as an increase in non-regular employment, has progressed amid pressure to reduce labor costs through corporate restructuring. However, as the economy is continuing to recover, regular employment, has also shown a sign of recovery.
- The number of young non-regular employees has been increasing. There is a concern that these people fail to accumulate vocational skills in their early life, which will have an impact on the Japanese economy, and necessary measures should be taken accordingly.

Section 2 Challenges towards the strengthening of human potentials in terms of acquiring vocational skills
- According to the findings from a questionnaire survey conducted by the Cabinet Office, school education before their entry into the workforce and vocational education and training after their entry into the workforce have been playing an important role in strengthening human potential in terms of their acquiring vocational skills.
- As corporate restructuring is under way, a firm's role as a provider of vocational education and training has been changing, while individuals have been playing a larger role. From the perspective of strengthening human potential in the future, it is important to establish a system that provides young people with opportunities for vocational education and training after their entry into the workforce, as well as to reinforce the opportunities for them to have education and training at school.

Section 3 Economic disparity in terms of the household sector
- The income disparity seen from economic statistical data has been moderately expanding as a whole. To a great extent, the result is due to the decrease in the number of household members and the increase in the number of households of elderly people.
- The Gini coefficients of total households that include single-member households declined, though slightly, from 1999 to 2004. However, this is possibly due to the concentration of income distribution amid a decline in the average income. For low-income groups, measures to assist their self-reliance efforts such as job assistance should be implemented to address this issue.
- Recently, the income disparity and the labor income disparity have widened among young people. The employment situation or increasing non-regular employment among young people may possibly have had an influence on this phenomenon and it is necessary to address the issue from the viewpoint of disparity.

Section 4 Changes in environment of the household sector and policy responses
- Although the economic recovery has been spreading from the business sector to the household sector, the environment in the household sector, e.g., the diversification in employment styles and the employment situation among young people is severe, thus support should be provided accordingly.
- It is important to support workers who are willing to make an effort to assume a better job on their own, through proactive policies that make it easier for non-regular employees to transfer to regular employees, and also through policies that provide vocational education and training.

Section 5 Summary

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