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Demand for Labor and Quality of Demand for Labor and Quality of EmploymentEmployment

atatForum on the Restated OECD Jobs Strategy in TokyoForum on the Restated OECD Jobs Strategy in Tokyo

October 30-31, 2006October 30-31, 2006

Junichi GotoKobe University

Japan

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OutlineOutline

Good Macroeconomic Policies – key to labor demand

Need to reduce demand-supply gap – effective labor demand

Pros and Cons to ALMP Quantity and Quality of labor demand Coping with labor market duality

– Lessons from female workers in Japan

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1. Good macroeconomic policies are 1. Good macroeconomic policies are 　　　　　　　　　　　　 essential to increase essential to increase

labor demandlabor demand Expansion of employment cannot be achieved

without economic growth.– Economic performances of OECD countries now

are generally better than those in early 1990s.– Unemployment rates now are generally lower than

those in early 1990s (except for Japan and Germany)

Both long-term growth and short-term stabilization are important.

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2. Erasing demand-supply gap is important:2. Erasing demand-supply gap is important:‘Effective’ labor demand‘Effective’ labor demand

In some countries (e.g., Japan and Germany), unemployment rates are higher in spite of better economic performance.

Regional disparity Demand –supply gaps in terms of:

– Job categories

– Type of employments (e.g., full-time vs. part-time)

– Skills and education level (e.g., Douglas-Arisawa’s low)

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Disparity between growth and Disparity between growth and unemploymentunemployment

J apan

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Germany

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Blue line: growth rate, pink line: unemployment rate

In Japan and Germany, unemployment rate has been increasing without regard to macroeconomic conditions.

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3. Does intervention reduce labor demand?3. Does intervention reduce labor demand?-- Pros and Cons for ALMP-- Pros and Cons for ALMP

OECD report– ALMP is effective and greatly needed.

Chicago school (e.g., Heckman)– ALMP raises cost of labor.– Higher cost of labor discourages employments.

How to reconcile?– The market determines the long-run equilibrium.– But, ALMP is important to reduce short-run adjustment

cost

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4. Quantity and Quality of Labor 4. Quantity and Quality of Labor DemandDemand

To expand the labor demand is utmost important to workers’ welfare.

The increase in employment may be a necessary condition, but not a sufficient condition for workers’ welfare.

More jobs with lower quality may not be desirable. Both quantity and quality should be taken into

account when policies on labor demand are discussed.– An example : part-time workers in Japan

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Employment Index in J apan (Y1994=100)

90.0

95.0

100.0

105.0

110.0

115.0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

maleFemale

Female employment is expanding …..

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Female Employment: regular vs. non-regular(J apan)

500

600

700

800

900

1000

1100

1200

1300

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

year

ten

thou

sand regular

non- regular

But, only non-regular workers are increaseing

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Wage Gap between Regular and Part-time Workers

60

65

70

75

80

85

Year

Per

cent

And wage gap has been widened

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5. Coping with labor market duality5. Coping with labor market duality

Decent works for everyone– women– Older workers– Youth, etc.

Accommodations for the weak Policies with longer and wider perspectives

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An example of duality and remedy for it:An example of duality and remedy for it:The case of Japanese female laborThe case of Japanese female labor

Gender wage gap in the egalitarian society– The M-shape due to child bearing and child care.

– Mainstream vs. marginal workers: The second challenge is difficult.

Deep-rooted duality– Social norm on family responsibility

Policies with longer and wider perspective is more important than short-term fix.

1360.5

63.0

63.5

64.5

67.6

69.5

69.7

70.0

71.1

74.5

75.0

75.0

75.8

76.0

76.0

80.0

81.0

82.6

83.0

84.7

86.0

89.0

90.8

30 40 50 60 70 80 90 100

Chille

Canada

Japan

Argentina

Switzerland

Hong Kong

United Kingdom

Spain

Singapore

Uruguay

Mexico

United States

Germany

Brazil

Paraguay

Italy

France

Denmark

Costa Rica

Colombia

Norway

Sweden

Australia

Gender wage gap in Japan is one of the worst

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40

50

60

70

80

90

100

18-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59age

J apan USA UK

Gender wage gap is bigger for older workers

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Female Labor Participation Rate by Age Groupe (J apan)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-

age group

perc

ent 1990

199520002005

The M-shape due to child bearing and child care

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Wage Profile of Standard Workers

100

150

200

250

300

350

400

450

500

18 19～ 20 24～ 25 29～ 30 34～ 35 39～ 40 44～ 45 49～ 50 54～ 55 59～ 60 64～ 65 ～

age group

thou

sand

yen

malefemale

Mainstream vs. marginal workers (fundamental divide in Japan)

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Wage of newly-hired workers by age

100

150

200

250

300

350

400

450

500

18 19～ 20 24～ 25 29～ 30 34～ 35 39～ 40 44～ 45 49～ 50 54～ 55 59～ 60 64～ 65 ～

age group

ten

thou

sand

yen

malefemale

Flat wage profile for non-standard workers

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0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0

Korea

J apan

Hong Kong

Germany

United Kingdom

United States

perc

ent

Female managers are (very) few:Gender gaps in promotion, too.

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家事労働の時間

0.26

3.18

7.02

0.58

4.02

6.17

1.26

4.10

5.50

0

1

2

3

4

5

6

7

8

working male working femal housewife

１日

あた

り時

間数

weekdays Saturday Sunday

Women bear much more family responsibilities than men:Social norm? longer working hours of men?

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Men at Work and Women at Home

60.1

57.8

46.9

45.2

5.9

4.4

6.1

5.9

34.0

37.8

47.0

48.9

0% 20% 40% 60% 80% 100%

1992

1997

2002

2004

yes don't know no

Mentality is also a big factor

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ConclusionsConclusions Good Macroeconomic Policies are key to the expansi

on of labor demand To reduce demand-supply gap is also important – ‘e

ffective’ labor demand Balanced labor-market interventions are important. --

ALMPs should be administered so that they do not reduce labor demand.

Both quantity and quality of labor demand are important.

Coping with labor market duality requires a wide range of policy tools (including education)– Lessons from female workers in Japan