Japanese economic growth fell dramatically in the 1990s and deflation has been continued. In the labour market, changes were seen in the supply and demand of labour. The former was affected by an aging society producing fewer children, a larger share of female labour force in the total labour force, increase of workers with higher academic background, and the latter owing to the changing industrial and occupational structures, as well as the progress of the information technology. In terms of job creation and loss, the number of employed persons decreased between 1996 and 2001 due to a lessened increase in new and existing establishments and a decrease in employment due to businesses closing.
The real labour productivity increase (annual rate) in Japan dropped from 3.9% in the 1980s to 1.9% in the 1990s due to the lowered contribution of capital stock and the total factor productivity, including advances in technology. The narrower decline in manufacturing industry productivity, as compared to all industries, is a result of a continuing large contribution to the increase in total factor productivity.
The globalizing economy promoted an international specialization and increased the overseas production ratio, which possibly led to the loss of employment in the domestic manufacturing industry. |