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1. Aging Labor Force and Changing Social Security Programs

 

Labor Market Responses

 

At the close of World War II, the Japanese economy was severely crippled (Thompson, 1950), but her productive capacity had recovered to the prewar level by the second half of the 1950s. During the 1960s, Japan's real GNP grew at the phenomenal rate of about 11 percent per annum. However, since the oil crisis in 1973 which triggered a series of measures for restructuring the Japanese economy, her economic growth performance has been much less impressive than that for the 1960s. In addition, the Japanese economy has been at the recessionary stage since the early 1990s.

As a consequence of the demographic shifts and accompanying economic changes, the annual rate of labor force growth has varied over recent decades, ranging from 1.3 percent in the 1960s to 0.9 percent in the 1970s, and to 1.2 percent in the 1980s. There have been substantial differences in the pattern of growth rates between men and women over this period. The average annual growth rate of the male labor force declined from 1.6 percent in the 1960s to 1.0 percent in the 1970s and to 0.9 percent in the 1980s. In contrast, the corresponding growth rate of the female labor force dropped from 1.0 percent in the 1960s to 0.8 percent in the 1970s, but it rose to 1.7 percent in the 1980s. A brief comparison of these growth rates for the two sexes during the past decades reveals that the female labor force has been substituting for the male labor force to a considerable extent, thus keeping the overall labor force growth rate at a relatively high level (Ogawa and Clark, 1995).

Moreover, the proportion of aged workers in the labor force has been steadily increasing in recent years (Ogawa and Clark, 1993). The Japanese census data show that the proportion of employed persons aged 40 and over grew from 37.5 percent in 1950 to 42.6 percent in 1970, and to 58.7 percent in 1995. These age structural shifts of the work force have caused a continuous rise in the mean age of workers. The average age of workers outside agriculture and the service industry was 30.8 years in 1961, 34.6 years in 1973, 37.5 years in 1984, and 39.3 years in 1996 (Ministry of Labour, various years).

As can be seen by inspecting Figure 1, there are clear differences in the pattern of increase of the mean age among various industries. The manufacturing industry, which is one of the core industries in the Japanese economy, has undergone both in absolute and relative terms the greatest increase in the mean age of its work force. To partly cope with this rapid rise in the mean age of its workers, the manufacturing industry has been heavily utilizing robotics and other automated production technology (Ogawa, 1982; Ogawa, Jones, and Williamson, 1993).

 

 

 

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