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Sunday, August 25, 2013

Japan's Changing Labor Force

...it's too late for less male-centered policies...
ImageA concurrent set of posts on the NBR Japan Forum is on the role of women in the labor force. At younger ages, the shift towards greater participation is dramatic, a 30 percentage point jump among 25-29 year olds. Participation for women age 30-34 is following in parallel, with about a 13 year lag:
ImageHowever, this is less economically meaningful than at first glance. Women are not going to be able to save Japan from its demographic challenges. Of course it is these very same women who are not having lots of children. But more to the point, these young women are now the only daughters of an already smaller generation of women.
So even a continued increase in women pursuing careers — already apparent among younger women — will only have a modest impact on the shrinking of the labor force. There are simply too few in these age brackets, and the number is falling yearly. Hence despite the rise in participation, the total number continues to decline:
Policy changes could smooth things, and from a microeconomic perspective (and a lifestyle perspective) could bring many benefits, particularly to women. [For an amusing portrayal of the challenge of a stay-at-home father, albeit in a US context, see Kim Stanley Robinson's Forty Signs of Rain.] But from a macroeconomic perspective it's too late for less male-centered policies around the workplace and the home to make a difference.

For the Japanese auto industry – by which I mean the industry located in Japan – this has strong implications. First, this is one of the underlying changes reflected in a set of graphs I posted on the future of the auto industry in Japan: firms hoping to sell cars face a shrinking market. It also means that recruiting workers will be harder. In Japan (unlike in China and India) families do not engage in sex selection (aborting girls), and the change in the number of young men in the labor force is likewise declining. (Indeed, because the participation rate for men has long been near 100%, the drop is more rapid as there has been no offsetting rise in the proportion of men working.)

This shows up too in technical fields; the number of engineers is down 15% from peak and casual observation (academic 2006-7 at Chiba University, a strong engineering school) is that many of those in technical fields are international students. Unless the auto industry (by which I mean suppliers, who generate two-thirds of employment) globalize, they will cease to be players, lacking the engineering clout to stay in the game. And if the unsuccessful efforts of my son (as a TEFL-certified teacher) to find an English teaching job in Japan are at all representative, young Japanese are not learning English. Meanwhile, of course, Honda and Toyota already employ 1,000 or more at their technical centers in the US. As businesses, they are positioning themselves to draw upon a global pool of engineering talent. That however does not help the Japanese industry.