electronic journal of contemporary japanese studies
10 in 2008
Japanese Employment in Transformation
The Growing Number of Non-Regular Workers
Key Words: non-regular employment; Japanese labour market, labour reform
This article presents an examination of the growing number of non-regular employees in Japan since the 1990s. In doing so, I will argue that recent changes to the employment structure have created economic and social gaps between regular and non-regular employees, leading to problems in people's personal lives and in Japanese society as a whole. In addition, I will explain the current state of conflicting interests between participants in the Japanese employment market, and its structure. At the present time, labour reform is still under discussion; and the direction of labour policies and future prospects for the employment market are not yet clear. Japanese companies, labour unions, and policy makers are therefore at a critical turning point for deciding the direction of employment policies aimed at both economic growth and working people's welfare.
The first section of this article will examine both the characteristics of the increase in non-regular employment and the various groups of people and working styles that can be included under this category. The section will also analyse the sources of the shift in these employment structures. Companies' changes in employment management policies that cut back on hiring and the shift to non-regular employees in order to decrease personnel costs appears to be the foremost reason. At the same time, a change in the industrial structure towards tertiary industries and a consequent increased dependence on non-regular workers are other important factors. However, there are not only factors on the demand side, but also from the supply side, as people now have diverse working preferences. The second section will then present problems brought about by the increase in non-regular employment and discrepancies in conditions between non-regular and regular employees.
As a result of the increase in the number of non-regular workers, many issues are appearing in Japan's economy and society. Differences in employment status have subsequently led to divisions such as gaps in income, social security coverage and life-course choices. Under such circumstances, discussions on labour reform are now in progress, involving interest groups such as business leaders, labour unions, policy makers, politicians, and the administration. Keeping these factors in mind, the third section of this article will examine responses to this issue from the government, labour unions, and business, as well as focus on the relationships of interests between the government, business, and labour unions. The section will also discuss current labour reform measures. In the concluding discussion, the article will consider future possibilities for changes in the employment market. Although Japan's economy is in a better shape than during the 1990s, given current economic conditions worldwide, companies' attitudes to employment are likely to be inconclusive. Therefore, we need to wait and see in which direction the Japanese employment market will shift in future years.
1. The Shift to an Increasing Number of Non-Regular Employees
Since the 1990s, there has been an expansion in the numbers and proportion of non-regular employees, among both those who work shorter hours than full-time regular employees and those who work similar hours to regular employees. In addition, the percentage of non-regular employees among younger people, and women of all age groups, is notable. The numbers of other groups of people, such as temporary workers and people who work for contracted businesses have increased at the same time. On the whole, the number and percentage of non-regular employees have been increased as a consequence of the formation of other groups and employment statuses within this category.
Under the current Labour Standards Law, both regular employees and non-regular employees are covered by the same term 'employee'. In practice, however, the benefits non-regular employees are given are limited because their working hours are shorter than those of regular employees, and the types of contracts they have made with their employers are different from ones which regular employees have. Consequently, their conditions of work are generally very different from the conditions regular employees can enjoy.
In addition to those non-regular employees who work shorter hours than full-time regular employees, the number of people who work as long as regular employees, but are categorised as non-regular employees has also increased, leading to another group of people who work under less favourable conditions, in terms of hourly wages, bonuses, retirement benefits, and contract period (Yamagami, 2006, 86; Pātotaimu Rōdō Kenkyūkai (Committee to Study Part-time Working), 2002b). For example, if part-time workers work long hours on a par with full-time workers, they are not covered by the legislation of the Part-time Workers' Law (Broadbent, 2003, 4). A shift towards longer hours among part-time workers has been identified, first by the fact that the number of female part-time workers working under 35 hours per week declined during the mid-1990s, while the total number of female part-time workers increased (Broadbent, 2003, 4); and by research showing an increasing number of non-regular employees who worked for forty hours or more during the period from 1999 to 2001 (Pātotaimu Rōdō Kenkyūkai, 2002b). Although the number of female part-time workers who work more than 35 hours per week has fluctuated during the early 2000s, the overall trend among part-time workers, in terms of their working hours, is that both groups of people – those who work less than 35 hours and those who work for 35 hours or more – have increased in number (Figure 1).
The role which the increased number of female part-time workers has played in the Japanese economy since the economic growth period from mid-1960s to mid-1970s has often been said to be related to changes in industrial structure, technological development and the country's industrial and welfare policies. However, if we look at changes which occurred during the 1990s, we can see some unusual characteristics regarding the increase in the number of non-regular workers. Firstly, the number of non-regular workers increased by 60 per cent from 1992 to 2002, while the percentage of total employees, excluding executives, only increased by 4 per cent, and the number of regular employees decreased by 10 per cent. In 2002, non-regular employees accounted for 30.1 per cent of non-executive employees, up from 20 per cent in 1992. Secondly, it is notable that the percentage of dispatched workers surged by more than 300 per cent. Thirdly, although the percentage of non-regular employees among women exceeded more than 50 per cent in 2002, and this fact itself represents a characteristic of the Japanese employment structure, the increased number of male non-regular workers should also be noted (Table 1).
From the latest data in 2002, we can further see the recent characteristics in the structure of employment of non-regular employees (Table 2). The percentages of non-regular employees among younger people is remarkable. Regardless of sex, the ratio of non-regular employees to others in the groups aged 15-19 and 20-24 is extremely high (in total, 72.36 per cent in age group 15-19, and 40.58 per cent in age group 20-24). Young people who work as part-time workers (also called arubaito from the German word 'Arbeit'), or irregular workers, or are unemployed have generally been called furītā (freeter: the combination of free + Arbeiter) (Honda, Yuki, 2004, 110). Yuki Honda concludes from the data that freeters are becoming more numerous among women, young people and people with lower educational attainment, and this phenomenon is no longer small enough to be comfortably ignored (ibid).
Another characteristic of this data is the high percentage of non-regular employees among women throughout all age groups. Women's inferior position in the Japanese employment market and social welfare system, which encourages women to work on a non-regular basis rather than on a regular basis in the formal economy, has been one of the biggest issues Japan has confronted; yet the situation does not seem to be improving (Macnaughtan, 2006). Figure 2 shows the increase in the percentage of non-regular workers among employed people, using the same data from the Basic Survey on the Employment Structure.
One group we need to pay special attention to is people who are dispatched to a different company from their actual place of employment (Nitta, 2003, 56-8). We have seen that the number of dispatched workers has rapidly increased, although the actual numbers are still small. However, there are many people who do similar work but are not placed into this classification as they are not covered by the Dispatched Workers Law. They are employed through contracts between companies. Sales clerks, factory workers in steel and shipbuilding industries, building service employees, workers in the construction industry and workers in security agencies are representatives of this kind of employee. These people have been used in companies as labourers in addition to dispatched workers who are covered by the Dispatched Workers Law.
Overall, Honda analyses these increases in numbers of part-time workers as a quantitative shift of part-time workers to the core of companies (Honda, Kazunari, 2004, 69). He also points out that there has been a qualitative shift of part-time workers to the core of the companies, that part-time workers' job content and abilities have become similar to those of regular employees (ibid, 73), and that companies show a positive intention to continue this shift (ibid, 75-6).
Sources of the Shift
Why has this shift occurred? First, it is clear that the biggest source of this increase has been due to companies cutting back on hiring regular employees, which has resulted in the so-called 'hiseikika (shift in the employment structure to an increase in non-regular employees)'. Second, there are various arguments surrounding young non-regular employees, which I will expand upon below. Third, there has been a change in the industrial structure and an expansion in service industries where companies rely on non-regular employees. Fourth, we also need to pay attention to political, societal and economic systems which have created a large number of female part-time workers. Finally, as I have mentioned, it has been argued that there has also been an expansion in the number of non-regular employees in manufacturing, which has attracted attention. Although companies' demand for decreasing personnel costs during the economic downturn in the 1990s may be at the centre of the shift, other factors have also contributed to form current employment structure and practices.
The worsening financial situation in companies has forced them to review their employment and personnel management systems. For example, in salary and promotion systems for regular employees, there has been a shift to pay-per-performance systems (seikashugi) since the beginning of the 1990s. The improvement of efficiency in labour costs and personnel management systems, which may be symbolised by an initiative of the former Nikkeiren (Japan Federation of Employers' Association) in 1995, 'Shinjidai no Nihonteki Keiei' (Japanese-style management in the new era), has been pursued since the mid-1990s. 'Shinjidai no Nihonteki Keiei' proposes to segregate employees into three types: employees who are the core of organizations, with long term employment prospects; highly specialised professional employees with definite employment contracts; and a flexible workforce which will be involved in simple and routine work (Nikkeiren, 1995). To a considerable degree Japanese companies have steadily pursued this initiative.
These tendencies within Japanese companies are pointed out by various researchers (for example, Pātotaimu Rōdō Kenkyūkai, 2002b; Mizumachi, 2007, 71). Yamagami summarizes (2006, 85-6) that the increase in part-time employees became strongly apparent, especially after the burst of the bubble economy, and with the advance of corporate restructuring. Other factors have also accelerated the trend: deregulations such as revisions of the Labour Standard Law and the Dispatched Workers Law; price decreases due to international competition; and allocation of simple tasks to non-regular employees due to the advancement of information technology.
In addition, Kanayama and Ogata (2007) attribute companies' behaviour to a desire to contract labour costs, and to increase earnings retention and share dividends. Big companies are anxious about being acquired by foreign capital or investment funds. Consequently, managements give higher priority to issues such as dividend increases, stock buy-backs, and facility investments, although they understand and want to increase the labour share.
In the case of youth employment, a number of analyses have been made. Nitta analyses the process of corporate employment adjustment in relation to the worsening youth employment market (Nitta, 2003, 71- 4). The first and most important measure to be taken when adjusting personnel costs is to reduce hiring. If companies are driven further into an unavoidable corner, other measures such as external assignment and dispatch are taken. Finally, voluntary retirement will be sought. Nitta argues that Japan experienced several economic downturns and each time companies implemented this kind of employment adjustment (ibid.). However, the difference this time is that companies hired unprecedented numbers of university graduates before the collapse of the bubble economy, and consequently new graduates in later generations have had to pay the price. Figure 3 shows the trend towards a high level of job opportunities for university graduates from the late 1980s to the early 1990s, and the drastic decrease after the burst of the bubble economy.
This trend has been greatly influenced by the changes in the employment market during the 1990s. It was previously considered, however, that the increases in youth unemployment or young people working as non-regular employees were due to the specific attitudes of young people who had been raised in an affluent society. As the number of freeters became significant, and as these issues stopped being limited to young people but started expanding into broader groups of workers, people began questioning the changes in the employment structure and market.
Kosugi (2004b) summarizes that with the expansion of the employment market for young, non-regular employees in tandem with the worsening job market for new graduates since the 1990s, the term freeter has lost its original meaning of 'young people who earnestly take on a challenge for their dreams' which was created in the late 1980s (Michishita 2001 cited in Kosugi, 2004b). Instead, the negative perception that 'freeters = young people who are unable to work properly' began spreading. There are mixed perceptions of young people who are non-regular employees.
It is argued that there are two main causes for the increase in freeters (Kosugi 2004b). One is the change in companies' recruitment strategies. The other one is young people's changing attitudes toward work, which is seen in cases where young people choose to become freeters as they are not keen to hunt for jobs, and their high rates of voluntary redundancy from companies has been observed. As I have mentioned, a tendency to point to the young people themselves as the cause was seen at the beginning of this phenomenon; however, as more studies were carried out, a bigger picture began to take shape.
As well as freeters, young people who are called NEET (Not in Education, Employment or Training) have caught people's attention. Inui (2005) argues that mass media and politicians suppose that the NEETs are troubled young people, and government reports focus only on a small section of freeters and NEETs who do not have the motivation to work or come from wealthy family backgrounds. In reality, most of them are willing to work, and they are from less privileged backgrounds and of lower educational level. Genda (2001) and Genda and Kurosawa (2001) assert that the harsh labour conditions due to the efforts of companies to protect middle-aged employees have taken away job opportunities from the young people. Kosugi (2001) further argues that one characteristic of the phenomenon of freeters is that the career model of freeter emerged during the process of changing Japanese-style employment practices.
Yuki Honda points out the inefficiency of Japanese educational policies in responding to the increase in freeter and NEET youth since the late 1990s (2004, 111-3). She argues that reorganization and establishment of a new order in the transition from school to work is seen in '(1) 'liberalization' of the labour market for new school leavers and university graduates; (2) introduction of work-based learning and trial employment; and (3) encouragement of continuing skill development, such as participation in adult education and training.' Although this transition can be understood as a shift to the 'Americanization' of the Japanese school to work system, in reality Japanese youth is not trained in schools in terms of relevant vocational qualifications and career designs for seeking jobs (Honda, 2004, 112-3). Kosugi (2001) also points out the effect of social inequality which may marginalize certain groups of young people.
The underlying condition here is the apparent shrinkage of the employment market for regular employees and companies' high demand for non-regular employees. Although companies recently started to loosen up their recruitment activities for new graduates, the market has experienced a downturn since the beginning of the 1990s, known as 'shūshoku hyōgaki (employment ice age)', sometimes with the prefix of 'chō (extreme)'. Positions which were once filled by new graduates, such as administrative and clerical jobs, are now filled by dispatched workers. Filling vacancies caused by the departure of regular employees became more and more difficult during the period due to the tightening of companies' personnel expenses (Nihon Keizai Shimbun, 30 November 1997; 9 March 2000; 2 September 2004). This tendency can be seen in the data. Shūgyō Kōzo Kihon Chōsa (Basic Survey on the Employment Structure) in 2002 analyses how people's job status has been altered by their changing of jobs (Figure 4). Not only is the first step into the job market as a new graduate or school-leaver difficult, but so is joining a group of regular employees from another group of non-regular employees. (Statistics Bureau, 2002b).
While numerous studies have found that many freeters have arrived at their current employment status involuntarily, there are also some studies which argue that there are voluntary aspects to this increase in non-regular employees. For example, a study conducted by Nihon Rōdō Kenkyū Kikō (Japan Institute of Labor (JIL)) on the diversified working situation of atypical workers (Table 3) (JIL, 2003) shows that the proportion of people who have not chosen their non-regular status voluntarily is not great.
Although the percentages of registered dispatched workers marked the highest (male 40.2 per cent and female 29.7 per cent: a total of 31.2 per cent), in general, the percentage is very low. Wakisaka (2003) concludes in the same study that the percentage of non-regular employees who want to change their status to that of regular employees is not so high either (permanent employment-type dispatched workers 18.1 per cent, registration-type dispatched workers 21.4 per cent, young people and short time part-time workers 15.0 per cent, married women and short-time part-time workers 4.4 per cent, young people and other part-time workers 34.2 per cent, contract workers 19.2 per cent). Wakisaka suggests that one possible reason why there were not so many short-time part-time workers who want to become regular employees may be the overlong working hours of regular employees (Wakisaka, 2003). The findings of this study suggest that people who have chosen to be non-regular workers did so because of 'a view that private life is more important than working' in addition to a desire to avoid the long working hours associated with full-time employee status (Iwata, 2004, 90).
Another aspect is the change in the industrial structure of Japan, as a result of the increase in the proportion of tertiary industry companies in the economy. This industry especially relies on cheap and flexible labour. The Cabinet Office reported in 2006 that the percentage of non-regular employees in the industries including wholesale, retail and restaurants reached nearly 50 per cent, and over 35 per cent in other service industries in 2004; in other industries such as manufacturing, insurance / finance / real estate, construction and logistics / communication, the percentage ranges from 15-20 per cent (Cabinet Office 2006). While the percentages of non-regular employees are particularly high, the overall trend is that the proportion of non-regular employees has increased in all industries regardless of company size.
Moreover, there are political, societal and economic systems which have led to the massive number of married part-time female workers. As I have mentioned, one of the characteristics of recent trends is that large numbers of men started working in this non-regular segment. However, the majority of non-regular employees are women, and now the percentage of non-regular employees among female employees has reached more than 50 per cent (Figure 2). During the rapid economic growth period the female workforce increased. Around the mid-1960s, the M-shaped labour force participation model was promoted as it matches two contradictory policies – an adjustment valve of economic fluctuation and a family policy which emphasizes family responsibility (Yokoyama, 2002, 83-6). Women's role as a substitute labour force during the economic growth period later shifted to tertiary industry with the change in industrial structure and the new demand for female part-time labour. This gendered employment structure has been criticized as it has condemned women to cheap part-time labour and labelled women as cheap labour, in addition to their family role of unpaid worker which sustained reproductive functions in the home (Kuba, 2001, 56-7). Consequently, women's choices have been limited by the gendered division of labour, the employment system, social security system, taxation and patriarchal ideology (ibid). That situation does not seem to have changed significantly in terms of women's labour. While women's advance in the workplace and gender equality in economics and politics have been advocated, in reality the gender gap of employment status has not been narrowed if we look at the big picture.
As for the recent expansion of non-regular employees in manufacturing, one distinctive phenomenon is the emergence of contracting work between companies, which involved many non-regular workers (Nakano, 2007, 89-90). As I have discussed in the previous section, this type of contract has caused some controversy in society. From the companies' point of view, however, flexibility of manning by using non-regular employees may have enabled companies to respond to international price competition and shortened product cycles.
2. Issues Caused by the Increasing Number of Non-regular Employees
The reason why this issue has become such a problem is that the difference in employment status has brought about a considerable impact on people's lives, leading to gaps between regular employees and non-regular employees, and clear divisions between people. These gaps, or kakusa in Japanese, seem to segregate workers into rich and poor, or the haves and the have-nots. Social security and public welfare systems, which have become dependent on company welfare systems, are also deeply implicated in the creation of these divisions. Several studies have also served to give warning of the impact on business activities, economy and subsequent policy making.
Ota (2005) examines the income disparities among Japanese male employees by focusing especially on youth employees and by separating regular employees and non-regular employees. Ota argues that the income disparity revealed by the examination of the Gini-coefficient grew from 1997 to 2002 (Ota, 2005). In particular, along with the increase in non-regular employees, the broadening of the gap is especially notable among youths. He points out that although there has been a perception that gaps in household earnings and wage statistics are superficial differences caused by the aging of society, the income disparity has clearly become broader under the changing labour market (ibid.). As for wage differences between regular employees and non-regular employees, UFJ Sōgō Kenkyūsho (2004) estimates that the average annual earnings of regular employees in the age group of 15-34 years is 3.874 million yen, while part-time employees' average annual earnings in the same age group are 1.058 million yen. This estimate shows that the average earnings of regular employees are 3.7 times those of non-regular employees.
This income disparity has influenced differences in people's life courses. Sakai and Higuchi empirically examined differences in the life course between people who became freeters and people who started working as regular employees (Sakai and Higuchi, 2005). They found that timings of marriage and childbearing of people who have experienced a period as a freeter are later than the other group; some not getting married or having children. The employment experience during youth has had a great impact not only on earnings and employment status afterwards but also on marriage and child-rearing behaviour. Moreover, the extent of the impact has become greater since the 1990s. Sakai and Higuchi conclude that in addition to the several factors behind the falling birth rate which have been pointed out elsewhere, the expansion of unstable employment has accelerated the decline in the birth rate (ibid). In addition, Kashima (2007, 108) presents his assumption that non-regular male workers such as those called 'freeter' can be excluded as candidates for future marriage. He deduces that Japanese society still holds a strong gender norm of the male breadwinner; in such a society, men whose employment and income are unstable may be regarded as dropouts, resulting in people's disdain for them. There are indeed many other reasons for the declining birth rate in Japan, such as the advance of women to the core labour force, insufficient child care systems, and changes in people's values. However, unstable financial and employment status do not seem to be unrelated to people's choice to defer their marriage and childbearing.
The above researchers' findings concerning economic gaps among people have also been supported by a recent study by the OECD (2006). This study points out the recent trends of income inequality and expansion of relative poverty (OECD, 2006, 98-122). The study argues that although Japan maintained a lower level of income inequality compared to other OECD countries during the post-war era, the inequality in disposable income has risen from the mid-1980s to the year 2000. The report admits the aging population partially explains this change; however, it focuses on the increase in the number of non-regular employees in society. This dualism which segregates employees into regular and non-regular has created serious issues. While inequality among regular employees has gone down, this growing number of non-regular employees – primarily part-time employees – has caused the overall increase in income inequality. The study also points out that limited mobility between the regular and non-regular segments of the labour market has exacerbated the problem.
Rengō Sōken (2005) attributes two reasons for the emergence of income inequalities and the expansion of relative poverty: inefficient income redistribution policies in relation to social security benefits and tax systems; and significant rise in the lower-waged employee numbers (please refer to Figure 5 for changes in the Gini-coefficient of redistribution income).
In Japan, the poverty rate of working single parents is extremely high (more than 60 per cent). Among those senior citizens that fall in the poverty category, half of them are working, something not seen in other countries (Rengō Sōken 2005). Of those categorised in the poverty group, 40 per cent represent households with dual earners, 30 per cent represent households with single earners, and the unemployed account for only 10 per cent. Consequently, the term 'working poor' has become another symbolic phrase which depicts people's concern and fear in the present Japanese employment market and society.
Despite this situation, the government's initiatives for social welfare is regarded as insufficient by some researchers. For example Tachibanaki (2006, 32-3) points out the income maintenance policy in Japan has, indeed, shrunk. While the progressive income tax system weakened considerably, the regressive social insurance premiums have not changed. For instance, the highest income tax rate was 70 per cent in 1986; however, it has now decreased to 37 per cent (Tachibanaki, 2006, 56). The data shows us the contrast between the favourable treatment for high-income earners, and the disadvantageous system for low-income earners.
Nagase studied the relationship between non-regular employees and social security (Table 4) (Nagase, 2003; Iwata, 2004, 87-9). The current social security system, which is based on the collection of premiums from workers who receive their salaries monthly, is disadvantageous to non-regular workers whose working hours fluctuate greatly.
Furthermore, Table 4 shows the percentage of applications for social security by employment status. It is apparent that the benefits which non-regular workers can receive are considerably limited. Nagase notes that (Nagase, 2003; Iwata, 2004, 87-9) coverage of social insurance plans for non-regular employees in their 20s is only 40-60 per cent, and 50-60 per cent for single, female non-regular employees.
A study conducted by Rōdō Seisaku Kenkyū Kenshū Kikō (The Japan Institute for Labour Policy and Training (JILPT), 2006) shows another finding. In addition to disadvantageous social security provisions, private safety nets including savings, private insurance, family and friends' support and legal knowledge are weaker among people who do not have job security, despite the fact that these people require more support than those people who have high job security.
In his summary, Hiroi (2006, 23) uses the metaphor of 'Welfare and Benefits Department of Japan Corporation' to describe the policies of the Japanese social security system. In other words, benefit packages are provided for people within the production functions in the economy: excluding those who are out of those production divisions. However, the support from companies has been shrinking, as we have seen in the changes of their employment and personnel management policies. A serious concern is that the current employment structure, social welfare policies and the social system are creating a group of people who are left behind. It seems that in exchange for improving economic efficiencies for companies, a considerable group of people are losing out in terms of welfare.
The country's finance has also been affected by the change. UFJ Sōgō Kenkyūsho (2004) estimates the expected impact on the economy and tax revenues. Although the unemployed population among freeters will contract due to the narrowing gap between demand for young part-time employees and the total supply of youth labour force, the freeter population will increase as non-regular employment will continuously expand. It estimates that the population of freeters will reach its peak in 2010, at 4.76 million, and then decrease due to the decrease in youth labour force. Table 5 shows the estimation of economic loss due to freeters being unable to become regular employees.
This research estimates the economic loss of 1.2 trillion yen in tax revenue, 8.8 trillion yen in consumption, and 3.5 trillion yen of savings. Among these losses, consumption directly impacts on GDP, and consumption is reduced by 1.7 per cent compared with a situation in which freeters could work as a regular employees.
On the whole, researchers' analyses of the problems caused by the increase in non-regular employees can be categorised as follows:
(Cabinet Office, 2003; MHLW, 2006a; Yamada, 2006; UFJ Sōgō Kenkyūsho, 2004).
3. The Response
The Government's Response
Not only the increase in non-regular employees but the employment market as a whole became a serious problem in Japan with the prolonged economic recession during the 1990s. The unemployment rate hit 5.0 per cent in July 2001 (PMJHO, 2001a), and the government has responded to this worsening employment situation.
In September 2001, the Headquarters for Industrial Structural Reform and Employment Measures initiated the Comprehensive Employment Measures which aimed at:
As well as measures for regular employees, the improvement of the employment situation for non-regular employees and prospective workers still at school were also covered by these measures. Since 2005, the government also began putting emphasis on rural areas which were left behind in the economic recovery (MHLW, 2006a, 242-7). The cooperation with the private sector in establishing job-placement assistance also started from 2004. In March 2006, the cabinet set up Sai Charenji Suishin Kaigi (the Committee for Promoting Re-challenge), and compiled Sai Charenji Shien Sōgō Puran (Total Plan to Support Re-challenge) at the end of 2006 (PMJHC, 2007b). The plan seeks to support 'people' facing challenges including those who:
In addition, discussions and measures specifically for non-regular employees have also become active in response to the trend in the employment market and public opinion about employment uncertainty.
In 2001, the Ministry of Health, Labour and Welfare launched Pātotaimu Rōdō Kenkyūkai (Committee to Study Part-time Working) in order to facilitate consensus-building efforts among groups including administration, business and labour (Pātotaimu Rōdō Kenkyūkai, 2002a). It presents detailed investigation into the recent trend in part-time working, including causes which have led to the increase in part-time workers, issues such as wage gaps, contract period, unionisation rate and structural problems in the Japanese employment market which is divided into an internal labour market for regular employees and an external labour market for non-regular employees (Pātotaimu Rōdō Kenkyūkai, 2002b). The study submitted several proposals for the improvement of the employment market in response to its current practices which contains unbalanced factors of broadening the working patterns and responsibility of part-time workers, and shrinking employment opportunity for regular employees. They are:
The committee also addressed the necessity for business, labour and the government to make efforts to alleviate the current situation. The companies should design reward systems which are relevant to the work of part-time workers to re-energise their business activities; the unions should be aware of the importance of improving non-regular employees' working conditions; the government should improve the institutions and environment by which activities of both business and the unions would be promoted. Especially, the committee points out that it is inevitable that companies will broaden employment statuses such as dispatched workers and contract employees in order to have flexible choices of labour force; hence, fair treatment and employment security are indispensable. They are:
In 2004, the government compiled 'Action plans for independence and challenge of youth' in order to reverse the trend of increasing youth unemployment (MHLW, 2006a, 229-36). One of these is the promotion of the regular employment of 200,000 freeters by the establishment of employment support facilities (called job-cafés), the promotion of 'trial employment' of the young unemployed, introduction of a Japanese-style 'dual system' (provision of both classroom training and practical work in companies), the establishment of specialized corners to support freeters, and support for employment in the agricultural industry. Other measures are campaigns to enhance NEET youth's motivation to work and acquire skills, the enforcement of employment support and formation of occupational consciousness for students, and a national campaign to increase youth 'ningenryoku (human power)'. The Committee for Promoting Re-challenge confirms that it will continue its effort to improve the employment situation for freeters, NEETs, and other non-regular employees including part-time employees (PMJHC, 2007c).
Sato (2006) argues that although there are indeed many different levels of skill development among young people according to employment status, there is a significant degree of overlap between the respective groups in terms of typical and atypical employment. Therefore he claims that it is important to increase opportunities for skills development in the context of both employment statuses, as overemphasis of the disparities due to employment status itself may bring about restriction of the possibilities of movement between different forms of employment.
We need to wait and see the effects of the government's and companies' measures to develop young people's skills; however, it seems that companies are still reluctant to employ and invest in training these young people. For instance, as I have examined in Figure 4, the transition from part-time employment to regular employment is still difficult. The JILTP (2005) report points out that there are few companies which positively employ freeter / NEET youth as regular employees (1.4 per cent), while 41.8 per cent responded they will not hire freeters / NEETs either as regular employees or non-regular employees (JILTP, 2005, 300 cited in Mitani, 2006, 14). On the other hand, in the same report, companies responded that 90 per cent of them put emphasis on skill/ability development for regular employees while only 36.6 per cent showed this emphasis on development for non-regular employees (JILTP, 2005, 206-7).
Labour Unions' Response
Another important actor in this discussion is the labour union. Rengō, Japanese Trade Union Confederation, included improvement of treatment for non-regular employees in its spring wage offensive in 2006 for the first time (Takemasa, 2006; Nikkei Business, 2007, 35). However, the negative role that labour unions played in the recent trend of increasing non-regular employees and consequent divide from regular employees have been criticized.
For example, Nakamura (2005) concludes that unions accepted utilization of non-regular employees in order to adjust labour costs. Behind this behaviour of the unions is that they were scared stiff by global competition. During the latter half of the 1990s, many Japanese companies implemented drastic restructuring regardless of manufacturing or non-manufacturing, and manufacturing industries moved their production functions to countries with cheap labour such as China and other Asian countries. For unions, defending 'employment security' was the number one priority; consequently they became passive in the face of management initiatives. Nakamura also points out (2005) that due to the unions' weakening position against managements, unions have become inefficient in negotiating with companies: for instance, negotiation of the ratio between regular employees and contract employees on shop floors, defending production quality by maintenance and improvement.
Indeed, union leaders themselves confess their inefficiency in responding to the changing business and employment environment. For example, Nikkei Business (2007) reports comments of Takagi, the Chairman of Rengo:
Takagi also regrets that even though unions promoted the utilization of part-time employees, the salaries of regular employees have not increased. Despite the fact that productivity and added value have increased during these years, the profits are not allocated to employees appropriately (Takagi, cited in Nikkei Business, 2007).
A former leader of Rengō, Sasamori, also confesses that 'the biggest fault was to accept the deregulation of the Labour Dispatch Law (1986)' (cited in Tsurumi, 2007b). The law was revised several times and it removed the restriction in manufacturing industry in 2004. Sasamori recalls that he was convinced by being told that 'there are not so many bad managements' by leaders of Keidanren (Japan Federation of Economic Organizations) in their discussion. However, it seems that there have been some companies which have misapplied the system, especially big manufacturing companies.
For the survival of unions, whose membership ratio decreased to 18.2 per cent (MHLW, 2006c), and who have suffered significant contraction (especially in 2002 when Toyota Motor Workers Union accepted 'Bea Zero (zero per cent base-up at spring wage offensive)' (Egami, 2006)), inclusion of part-time workers is now indispensable (Egami, 2006; Yamagami, 2006; Takemasa, 2006; Nikkei Business, 2007, 33; Higo, 2007). However, it is also true that there are many industrial unions within Rengō, which still maintain the priority that 'it is more important to maintain unions for regular employees rather than unionising part-time workers' (Higo, 2007). It seems to take some time for unions to reach consensus about the inclusion of part-time employees in their activities.
Although the unionisation rate of part-time employees has gradually increased, it is still very small: it increased to 4.3 per cent in 2006 from 2.7 per cent in 2002, 5.2 per cent of all union members. According to a study of the Tokyo Metropolitan Government (Tokyoto Sangyō Rōdōkyoku, 2002), only 4.7 per cent were union members; 92.6 per cent of them were union members of their agencies, 2.6 per cent were members of unions specially for dispatched workers, 3.7 per cent belonged to other external unions.
While unions in companies have started to include part-time employees (direct contract with the companies), other forms of unions have began unionising individual employees. They are, for example, local community unions which welcome individuals (Nakamura, 2005), NPOs for dispatched workers (Tsurumi, 2007a; Haken Rōdō Net Wāku, 2007), and unions for non-regular employees (e.g. Zenkoku Yunion (Japan Community Union Federation), 2007). On the whole, unionisation for non-regular employees has just started.
Labour Unions, Business, and the Government
Issues concerning employment structure and labour legislation have always involved, or have been affected by, various actors: mainly business leaders, labour unions, and the government. As recent controversy on labour reform shows, the mass media have also played an important role in bringing up specific topics on labour issues, and reporting them to the public. Of these, business leaders, labour unions and governments often have conflicting opinions; and ministries, which in most cases means the Ministry of Health, Labour and Welfare (MHLW), and politicians, who are alert to opinion in their constituencies, have often sought solutions under such circumstances.
For instance, when Pātotaimu Rōdō Kenkyūkai published its final report in 2002, both Keidanren and Rengō responded to it differently, although they valued the study. Keidanren asserted that the treatment of the part-time worker should be addressed by the employer and labour representatives of each company, and guidelines for equal treatment should not disturb every company's personnel/labour management. In addition, Keidanren emphasised the company's competitiveness as well as the practicality of the measures in discussing the issues – to consider employees' various needs for working styles and employment patterns, and to follow company management and personnel/labour management in particular (Nippon Keidanren, 2002). On the other hand, Rengō was disappointed by the report which addressed the early establishment of the equal treatment rule. In addition, it was concerned that if deregulations of labour standards alone progressed, subsequently unstable employment would also be advanced (JAM, 2002).
In government, the Cabinet Office has enthusiastically promoted deregulation in many areas in Japanese society. The Cabinet Office established Sōgō Kisei Kaikaku Kaigi (the Council for Regulatory Reform) in 2001, and it has continued promoting deregulation although the names of the council and its members have changed several times (Cabinet Office, 2004, 2007a). The labour reform which is currently under discussion in Japanese society can be seen in the context of various reforms the government has pursued since the beginning of the 2000s.
At the same time, there are committees which have been struggling to find solutions to adjust interests among the actors to create a better situation for both the country's economy and working people's welfare, such as Rōdō Shijō Kaikaku Senmon Chōsakai (Special Investigation Committee on Labour Market Reform) under the Council on Economic and Fiscal Policy, the Cabinet Office (Cabinet Office 2007b) and Rōdō Seisaku Shingikai (the Labour Policy Council) of the Ministry of Labour, Health and Welfare (MHLW, 2007e). These facts may reflect the difficult positions of the government and interested bodies surrounding it.
Under such circumstances, the debate to revise labour-related laws which are sometimes referred to as the rōdō biggu ban (labour big bang / labour reform) has grown since 2006. In January 2007, the Diet started discussing labour law revisions which include provisions to:
The purposes of these big changes in labour legislation are to increase mobility of the labour market while improving the conditions for workers, including non-regular employees. They are, however, undoubtedly controversial. Regarding the exclusion of white-collar employees from working hours limits, for example, the labour side claimed that they did not agree with the plan as it would lead to long working hours, and there were already other institutions which enable employees to choose a flexible working style such as the discretionary labour system and flexible time. On the other hand, the employers asserted that raising overtime pay rates not only cannot be expected to curtail long working hours but also would exert an enormous influence on companies' management according to their size and type of industry (MHLW 2007a). As a result of these controversies, the proposed measure on the white-collar exemption was withdrawn from the Diet discussion in 2007 (Nihon Keizai Shimbun, 28 June 2007, 18 July 2007).
Politically, there are also two responses to this reform. As I have mentioned, the Cabinet Office and the Prime Minister's office have continued pursuing this reform. On the other hand, there is strong opposition to this movement even among politicians of ruling parties, as the reform now under discussion is seen to be too pro-business; they will lose a large number of votes (Nikkei Net, 2007).
As before, the discussion on the labour reform has involved all actors – politicians, the administration, managements, unions, public opinion and the media. Business leaders primarily seek cost efficiency and flexibility of the employment market, i.e. they basically support deregulations; unions and the majority of media reports criticize deregulation and business leaders' intentions; politicians anticipate elections; the administration tries to adjust each actor's interest, trying to find the middle ground between cost efficiency of companies and the welfare of the people.
As a result, while rigidities of the employment market are loosening up, the laws try to improve working conditions for all employees including non-regular employees. Five bills, including revisions of a law related to part-time workers (Law concerning the Improvement of Employment Management, etc. of Part-Time Workers), 'Unemployment Insurance Law' and 'Employment Promotion Law' have been passed. Three important bills including 'Labour Contract Law' and revision of the Labour Standards Law have been carried over to the next session (Yomiuri Shimbun, 29 May 2007; Rōdō Shimbun (Rōdō Shimbunsha), 16 July 2007). These bills aim to include important measures to protect employees. For example, by the Labour Contract Law, the concept of the equality between employers and employees will become clear. And abuses of the right of dismissal will be restricted. With the revision of the Labour Standards Law, the percentage of overtime allowance will be increased in cases where overtime hours exceed 80 hours per month, though that is a border to be regarded as causing karōshi (death from overwork). Another law will define the minimum wage in each region.
As of 2007, the legislative changes have yet to be completed. One possible scenario would be that the employment market will become more mobile, and subsequently the boundaries between regular and non-regular employees become blurred and the divisions between them narrow. Another scenario is that the legislative changes will promote companies' tendencies to hire non-regular employees without improving their working conditions. Consequently, a demographic change will take place whereby the number of people who are non-regular employees will increase, leading to an acceleration of the polarization of people's economic and social status. The third possibility is that the labour reform will be stymied by the strong opposition of labour against changes which will bring more flexibility into employment management, such as working hours, utilization of non-regular employees, and financial compensation for dismissed workers. We have not seen the result of these debates and labour reform yet, and we will need to monitor how the laws are amended and their effects on society at large.
Conclusion: Economic Recovery and Future Prospects
Apart from the possible big changes in the legal framework mentioned above, the economic situation will also have an impact on the employment structure and practices. Until late 2008 the Japanese economy had entered a period of long recovery, which was reported to be the longest expansion since the war (Nikkei Weekly, 2007a). The GDP growth rate showed an upward trend, and private consumption and household consumption also showed a recovery from late 1997 (ibid.). The active job openings to applicants ratio, including part-time workers, improved from 0.51 in 2000 to above 1.0 in 2005 (it was 1.08 in December 2006) (MHLW, 2007b, 2007c). By age cohort, the rate for young people particularly increased (Figure 6).
The data shown above, however, include numbers for part-time workers. If we take the rate for regular employees, it has been gradually recovering recently (0.58 in 2004, 0.65 in 2005 and 0.68 in 2006, all December figures) (MHLW, 2007c), although the rate for regularly used part-time workers has been well above 1.0 (1.32 in December 2004 and 1.41 in December 2005).
Another indicator to forecast the prospects for youth employment is the job opening to applicant ratio for new university graduates. According to the recent data prepared by the Works Institute (2006), the rate hit rock bottom in 1999: below 1, and then gradually recovered, although it has not reached the level attained before the collapse of the bubble economy. With the increase in position openings, the possibility that new graduates can find jobs also increases (Figure 3).
As for high school graduates, although the data shows gradual changes, the overall picture does not seem to have changed drastically. It is difficult to decide whether it is undoubtedly an upward trend. This is one of the main sources of freeters / NEET, therefore we need to keep a close watch on the changes in the employment market for high school graduates. (MEXT, 2006).
The Works Institute has published companies' hiring plans for mid-career employment (Works Institute, 2007). The recent trend shows that companies have become more open to mid-career employment, especially small companies, and industries such as information communication, the restaurant business and the accommodation business. The statistics of mid-career hiring in 2006 show that the age group of 25 to 34 constitutes the majority (47.6 per cent), followed by the 35-55 age group(28.0 per cent).
Since the long stagnation and recession of the 1990s, the overall employment situation has shown a recovery. However, and considering the downturn at the end of 2008, it would still be premature to conclude that there are definite signs which point to narrower gaps between regular and non-regular employees. Companies are still reluctant to hire people who have experienced a period as a freeter, consequently, regular employment opportunities for those people are still low. Moreover, although companies are now trying to hire more regular employees than before, they are also enthusiastically trying to hire part-time employees. In addition, the issue of preventing buyout has not been solved yet in big companies. Like the discussion on the labour reform in progress, companies' attitudes are also inconclusive on this point.
So far, it seems that the recovery of the mid- 2000s was brought about in part by sacrificing employees' welfare. If the economy quickly regains its upward momentum companies will need more human resources, and they may put greater emphasis on human resource management and increase labour shares. Consequently, companies may expand hiring of regular employees and review conditions for part-time workers, leading to improvements in the situation of current non-regular employees. However, problems of protecting companies from buyout, heated international competition in prices and labour costs are likely to continue. Domestically, price competition and demand for faster services have also been continuing. Considering these factors, the future prospect for the improvement of the conditions for non-regular employees is uncertain. The direction of the changes in the legal framework is one of the key points in alleviating the current employment and business situations. Undeniably, gaps such as those between rich and poor, regular and non-regular employees are now also serious problems internationally. Japan will need to find its own way to achieve both economic success and improve working people's welfare in this new global economic era.
 This article is based on a presentation at the Work, Employment and Society (WES) Conference 2007 (12-14 September 2007 at the University of Aberdeen), and a presentation at National Institute of Japanese Studies, Inaugural International Workshop (16-17 March 2007 at the University of Sheffield) 'Negotiating the ‘Boundaries’ of Postwar Japan'.
 In Shūgyō Kōzō Kihon Chōsa, employment status is divided into four categories: self-employed worker, family worker, employee, and employer. Employees, bar the executives, are further classified into six categories according to their internal titles: 1) regular employee, 2) part-time worker, 3) arubaito (note from the author: young people who work as part-time workers), 4) dispatched worker sent by labour dispatch service companies, 5) contract worker, 6) and others (Statistics Bureau, 2002a). In this article, 'non-regular employees' refers to employed people who are not regular employees. Indeed, it is difficult to classify employment status via their working hours (full-time or not) and types of contract (fixed-term employment contract or indefinite), although 'full-time work and indefinite employment contract' are the stereotypical criteria of employment according to one popular theory (Nitta 2003: 51).
 Under current labour/social security systems, the applications of each insurance scheme are as follows (general outline) (MHLW, 2006b):
1) Employment insurance
2) Employees' pension insurance and health insurance
 The law defines part-time workers as 'employees whose scheduled working week is shorter than that of standard employees hired by the same business establishment'.
 According to Heisei 18 nenban Hataraku Josei no Jitsujō (MHLW, 2007d), the number of female part-time workers who work less than 35 hours per week increased from 7.54 million to 8.65 million. As a percentage of total female part-time workers they increased from 36.1 per cent in 2000 to 39.9 per cent in 2001, and then hovered around 40 per cent.
 There are several statistics we can refer to in examining the Japanese employment situation. The Basic Survey on Employment Structure is conducted once every five years based on people's usual employment status (Usual method). The latest data available was published in 2002. The Labour Force Survey, on the other hand, is conducted every month. However, the data is based on people's status which indicates status only during ‘the last week of every month’ (Actual method) (Statistics Bureau, 2002c). According to the Labour Force Survey, the average percentage of non-regular employees in 2006 accounted for 30.1per cent of all employees except executives (the percentage of non-regular employees among male employees was 15.4 per cent: female 49.6 per cent) (Statistics Bureau, 2007).
 For the origin of the word please refer to Kosugi (2001).
 Although the increasing number of freeters has been widely reported, the number of freeter appears to differ according to the definition of it. Kosugi argues (2004a) that that fact itself shows the vagueness of the word.
 The term first appeared in the UK, and then spread in Japan from around 2004. (Inui, 2005; Honda, Naito and Goto, 2006).
 Kosugi (2001) also points out the change in school to work transition system.
 'Rōsōken Shirabe, 5 wari no Kigyōni Hakenshain: "Chōsetsuben kara Senryoku ni"'
 'Shinsotsu Haken Shain ga Kyūkakudai: Rōdō Shijō no Kōzō Henka Susumu'
 'Koyō Kaifuku, Hobo Zengyōshu ni: Hitode Busokukan 7 nenburi Suijun, Hojū wa Hakenshain de'
 'In the Japanese medical insurance and public pension systems, one has to work more than about three-quarters of the specified working hours per day (or per week) or working days per month of a standard worker to become eligible to be insured under the employee insurance plan. If working less than three-quarters and earning more than Yen1.3 million annually, the worker can be covered by the national pension plan. If working less than three-quarters and earning less than Yen1.3 million annually, the worker can be covered as a "dependent" under the employee's insurance plan. In addition, the minimum income level for tax deduction eligibility is specified by the tax system.' (Iwata, 2004, 87)
 Japan Research Institute (2007) points out a gradual decrease in labour distribution rate.
 However, as has been mentioned before, Rengō did not actively promote equal treatment for part-time employees at the beginning of the 2000s.
 Nihon Bengoshi Rengōkai (Japan Federation of Bar Associations) also announced their opinion in response to the report (JBA, 2002). From the point of part-time workers who are not treated equally, JBA criticized the report's lukewarm attitude. It addressed the necessity of establishing the principle of equal treatment, and expected initiatives sustained by laws, not by waiting for consensus building between employers and labour.
 The main legislative changes related to deregulation of employment format (Asahi Shimbun, '(Nyūsu ga Wakaran) Rōdō Biggu Ban tte Nani wo Suruno? Hatarakikata, Yatoikata no Ichidai Kaikaku', 22 December 2006):
 'Koyō Rūru 3 Hōan: Konkokkai Seiritsu Dannen, Saitei Chinage ni Eikyōmo'
 'Tenken Keizai Seisaku (4) Koyō Rūru ‘Hatarakikata’ no Giron Ketsuraku (07 San-in Sen)'
 However, this plan relating to the white-collar exemption is still regarded as an important issue to be discussed in the future (Nihon Keizai Shimbun 28 June 2007).
 See, for example, a comment by Takahashi (cited in Shūkan Tōyō Keizai, 2007, 80).
 For example, Koga (cited in Shūkan Tōyō Keizai, 2007, 81) and Takagi (cited in Asashima, 2006; cited in Shūkan Ekonomisuto, 2007).
 'Seifu, Yotō, Rōdō 3 Hōan Kon Kokkai Dannen'
 'Rōdō Kankei 5 Hōan Seiritsu – 166 Tsūjō Kokkai'
 The breakdown by industry in 2006 is as follows: manufacturing 2.33, distribution industry 6.38, finance industry 0.37, ser
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Kuniko Ishiguro completed her PhD in the School of East Asian Studies, University of Sheffield in 2008. She gained an MSc in East Asian Business from Sheffield in 2003 and is now conducting research into women and management in Japan. In addition, prior to gaining her MSc, she worked for many years in Japanese and American companies as a human resource manager. Her research interests include the development of human resource management strategies, sociology of work, career development, organisational behaviour and gender relations in organisations. She is especially interested in comparing Japan and other developed countries. Her recent research update can be referred in ‘Generating Equal Employment Opportunities for Female Managers: Balancing Work and Life in 21st Century Japan’ Social Science Japan 34 (2006) pp. 19-21.
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