Trends in the Regional Labour Economy

Section 3

The unemployment rate increased dramatically over about a decade. This increase is especially high in the prefectures in the Tohoku and Kinki regions. When the relation between employment situation and industrial structure is examined, those regions with a higher share of manufacturing experience a low unemployment rate. The increased unemployment rate was contributed by the population growth in the first half of the 1990s and the decrease of workers in the latter half. While the number of manufacturing workers decreased throughout the 1990s, the number of construction workers, which had supported the total employment, also decreased from the latter half of the 1990s, resulting in a decline of the number of workers on the whole. The decrease of manufacturing workers may have been influenced by the globalizing economy, and was high in some industrial agglomeration areas. The influence, however, varies between areas; strongly competitive export businesses did not experience any great decline in the number of employees. Number of service workers, on the other hand, is increasing in every region, especially in the field of aged-care service. While manufacturing industry is still expected to support employment to some extent, it is important to create jobs in services and other industries that meets regional demands and support a smooth transition of labour from manufacturing and construction.

Regional Unemployment
The unemployment rate in Kinki, Kyushu and Hokkaido regions exceeded 6% in 2002, while the national average stood at 5.4%. The unemployment rate is rising in all regions following the period of the bubble economy, but the increase is especially high in Kinki and Tohoku.
By prefecture, there is a gap in the unemployment rate of 4.8 percentage points between the lowest (3.5% in Shimane) and the highest (8.3% in Okinawa). The unemployment rate is high in the Kinki block prefectures, including Osaka, Hyogo and Kyoto. When the figures between 1990 and 2002 are compared, the unemployment rate rose dramatically in Osaka, Kyoto and Hyogo in the Kinki block, and Akita and Miyagi in the Tohoku block (Figure 22).
While unemployment rate has increased and the ratio of active job openings to applicants has declined in all regions following the bubble economy period, the regional differential has narrowed due to dramatic deterioration of the employment situations in the regions that previously enjoyed favorable conditions.

Regional Unemployment Structure
Employment situations may be affected by age distribution in the labour force and differences in industrial structure. According to the data of prefecture, unemployment rates are high in the regions with a higher share of younger labour force and low in the regions with a higher share of manufacturing industry (Figure 23).
When factors affecting the increase in unemployment rates by region are analysed, in terms of :(1) the change in the number of employed persons (employment effect); (2) the change in the population aged 15 or older (population effect), and (3) the change in the labour force participation rate (labour force participation rate effect), it was noted that the population effect contributed to the increase in unemployment rate between 1992 and 1997 and the employment effect (decreased number of employed persons) between 1997 and 2002 (Figure 24). By industry, the number of manufacturing workers decreased throughout the 1990s and the construction industry, through its public works projects in the first half of the 1990s, supported employment. Since the latter half of the 1990s, the number of construction worker has decreased as well, resulting in decreased numbers of workers in the total industries (Figure 25).

Decreasing Manufacturing Workers
Manufacturing workers are decreasing in all regions, and especially such industries as textile products and electronic machinery/equipment. This possibly is the reflection of the globalizing economy.
In industrial agglomeration areas, there is a growing share of companies that also manufacture products overseas, and further shift of production is expected in the future (Figure 26). The shift of production has greatly affected small- and medium-sized enterprises, including subcontractors, of which 60 percent responded that they faced reduced orders and price cuts.
Some industrial agglomeration areas have experienced a remarkable decline in shipment amounts and number of employees. The influence, however, varies between areas; in areas like Hamamatsu and Toyota, mainly producing transportation machinery, the decrease of workers stays little at about 5% (Table 27). By prefecture, there are some areas with increasing workers in IT-related industries including manufacturing of electronic components/devices (e.g. semiconductors) (1996-2001).

Increasing Service Workers
Number of service workers is increasing in all prefectures. Among nine fields of service industries (see Note) that are expected to create jobs in the future, number of private establishments has increased by about 18,000 (1.4%) and workers by about 0.8 million (7.8%) between 1996 and 2001. The characteristics of these fields are as follows:

(1)	Services for individuals and households, which account for a large share in the services as a whole in each region. The number of workers, however, increased only marginally due to prolonged low levels of consumption.
(2)	Service for firms and organizations, concentrated in cities, is increasing in the southern Kanto region. IT-related service, accounting for about 50%, is concentrated in Tokyo.
(3)	Aged-care, medical, environment and child-care services are distributed in local areas also, with growing number of workers. The increase is especially high in the aged-care service (Figure 28).

It is necessary that the manufacturing industry, which has been supporting the Japanese economy, continue to support employment to some extent. At the same time, it is also important to create jobs in the service industry that meets regional demands, and assist in the smooth transition of labour from manufacturing and construction.

Note:

Nine areas of services are: (1) services for individuals and households, (2) education for adults, (3) services for firms and organizations, (4) housing-related service, (5) child-care, (6) aged-care, (7) medical service, (8) legal service, and (9) environmental service.

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