Job Creation is Roughly Evenly Divided Between New Companies and Business Expansion by Existing Companies

    New establishments, which play a large role in job creation, may result from the creation of a new company or from business expansion by existing companies. The rate of new business startups for the former category was 2.2% annually on average between 1992 and 1996, while the like figure for the latter category was 1.0%. The overall size of the former category is half that of the latter category. Therefore, the contribution of each category to job creation is roughly the same. An analysis of job creation rates shows that job creation based on the latter category has been relatively stable, while job creation based on the former category has declined from 2.3% to 1.5% (Fig. 45). In addition, three-fourths of job creation at new companies are independent; the other fourth are established as subsidiaries.

Little Replacement Between Full-Time Workers and Part-time Workers

    The job creation rate of existing establishments has fallen significantly relative to economic expansion. However, the job destruction rate has not changed much. The rise or fall of employment at existing establishments is primarily determined by fluctuations in the job creation rate. In the first half of 1998, the number of full-time workers declined while the number of part-time workers simultaneously increased. However, within individual establishments, there is little replacement of part-time workers for full-time workers. The number of full-time workers has declined significantly at establishments where the number of part-time workers has also declined (Fig. 46).

Companies Focus on Internal Hiring to Meet Worker Requirements When Expanding into New Businesses

    The expansion into new businesses by companies is focused on fields related to their main business. Background factors leading to such expansions include applying existing technologies and knowledge, forecasts of rapid demand growth, and reduced future demand growth in current businesses. Companies try to rely on internal hiring, including the training of new graduates, to meet worker requirements for new businesses (Fig. 47). However, companies are increasingly taking steps such as headhunting employees from other companies in order to acquire specialized technical expertise, knowledge, and skills not available internally.