Japan has been making great strides in decreasing unemployment rates recently, but experts are warning of something terrible happening on the flip side.
According to government data released this week, the country’s jobless rate was at 2.8% in April for the third consecutive month, making it the lowest since 1994, the Japan Times reported. In addition, there were 148 positions for every 100 applicants, indicating a general surplus in available jobs.
Analysts, however, are raising their eyebrows, pointing at Japan’s shrinking labor force as a catalyst for the supposed good news. Apparently, this has to do with the country’s aging population and falling birth rates, among other issues.
For context, the current population at 127 million is estimated to shrink by one-third in the next five decades, and citizens over 64 years old are expected to make up a whopping 38% in the said period, Bloomberg noted.
“Japan faces increasing labor shortages in the face of a falling working-age population,” said Randall Jones, head of the Organization for Economic Co-operation and Development’s (OECD) Japan/Korea desk. In 2016, Japan tied with Iceland for having the lowest jobless rate among the 35 member countries of the organization.
The low unemployment rates are also not the outgrowth of Prime Minister Shinzo Abe’s “Abenomics,” according to an economics professor. Ivan Tselichtchev, who teaches at the University of Niigata, said:
“Low unemployment is not an achievement of Abenomics. It is a structural phenomena and, unlike most other developed countries it looks quite independent, or autonomous from the business cycle and economic growth rates.”
There are also other things to look at, such as Japan’s reluctance to accept foreign labor as well as low employee productivity. The latter in particular is counterintuitive considering the grim phenomenon of karoshi, where white-collar employees literally work themselves to death.
But then again, longer work hours do not necessarily translate to productivity. According to the Japan Times, visitors are shocked upon seeing too many workers in the service industry, for one.
“The number of employees is excessive by Western standards because Japanese customers like face-to-face service,” Tselichtchev said, adding that there are “millions” of small companies with low productivity rates. Still, he found it to be a method of boosting employment figures.