TACKLING UNEMPLOYMENT IN JAPAN

This week, as autumn turned to winter, a distinct chill seemed to enter Japan's employment picture.

The recession, due partly to the sharp climb in the value of the yen against the U.S. dollar, finally is beginning to bring seriously rising unemployment throughout the nation.With industrial activities continuing to stagnate, especially in the steel, shipbuilding, electric appliance and shipping sectors, corporations are starting to reduce their work forces by significant numbers the best ways they can.

Although Japan's unemployment rate was only 2.8 percent as of September, substantially lower than the 6.9 percent of the United States, the 11.5 percent of Britain and the 8.7 percent of West Germany, all indications point to something above 3 percent for the Japanese at present and much closer to 4 percent by spring.

Yet these percentages for Japan are somewhat distorted. When statistically calculated under the U.S. and West European formulas, the rate already is above 5 percent for Japan.

One of the major differences between Japan and the United States in computing unemployment figures, for example, is that to the Japanese government unemployed persons mean recipients of jobless insurance benefits. Whereas in the United States those considered out of work include those who have not been employed for a full month.

Moreover, personnel of Japan's military forces are classified as workers. In the case of the United States, however, 1.7 million members of the armed forces are left out of the employed population. Also, those laid off, regarded as a form of total unemployment in Washington, are not included among the jobless in Japan because at least part of their wages are being paid.

Still, in his drive to pep up the dawdling Japanese economy, Prime Minister Yasuhiro Nakasone is now stimulated by his anxiety that the nation's unemployment situation is becoming more difficult as a result of his ongoing moves to restructure the economy. Clearly, he is counting on his administration's efforts to expand domestic demand to lead to a stabilization of unemployment in due course.

According to increasingly concerned economists both in and out of government, the outlook for employment probably will be determined by how fast Mr. Nakasone moves to quicken the pace of the country's business. Indeed, there would seem to be some question of whether this is possible at all.

These experts fear that unless the Nakasone administration soon succeeds in meaningfully speeding up sluggish domestic demand by adopting a more stimulative course, unemployment may approach 7 percent within a matter of a year or even months in terms of the U.S. formula.

Such a situation may be retarded, at least temporarily, these specialists argue, if Japanese corporations begin to heed administration urgings that they guarantee employment for their current labor forces and reduce working hours on the basis of passing along the fruits of improved productivity.

One high-level official of the Economic Planning Agency insists that this is particularly true of both the structurally depressed and export-oriented industries where a serious hollowing out apparently is occurring.

He points out that increasing joblessness is undermining the country's traditional lifetime employment system. Hardest hit, the official notes, are middle-aged workers and those nearing retirement. This is causing Japan's famous seniority system also to show signs of disintegration.

Says Bunpei Otsuki, chairman of the Japan Federation of Employers' Associations: It will be impossible for Japanese industries to maintain the current employment levels, following the yen's drastic appreciation against the dollar. He warns all industries to use caution, adding that he is calling for continued efforts by both management and labor to work together to a void increases in unemployment.

All this marks a dramatic reversal in the thinking of Japanese corporate managers. During this past year, for instance, despite government pressures for shortened working hours, the number of private businesses adopting the five-day workweek have dropped steadily, directly opposite to the previous trend.

The result is that annual per-capita work hours remained beyond the 2,000- mark. In 1985 and throughout most of this year, the average Japanese worked 43 hours and 57 minutes a week (plus 7.5 hours of overtime). And, as usual, typical workers took only half their paid leave time.

Given the present financial troubles of Japanese corporations, (profits down by an average of 20 percent this year) this is just fine with management. Though these executives obviously have other matters to worry about, primarily the slowdown in the economy and the need to shift output overseas, one of their chief concerns is rising labor costs.

In this regard, a report issued last month by the trusted Sanwa Research Institute emphasized that labor costs in Japan's manufacturing sector have jumped by almost $25 billion during the past year alone as a direct result of the higher exchange value of the yen.

The institute's report warns that this increase is equivalent to an expansion of personnel rolls by 900,000. This has raised the ratio of labor costs to sales within the country's manufacturing sector from 13.5 percent to 14.9 percent in only 11 months or so.

Talks with leading businessmen around the country indicates that this deflationary situation is so drastic that much depends upon the ability of the nation's non-manufacturing sector to absorb more production workers due for future layoffs. It was suggested that the problem is growing so rapidly that wider introduction of the five-day week by the manufacturing industries is not really likely to create sufficient replacement jobs.

Japanese corporations, which once took pride in maintaining a steady work- force level by assigning surplus production personnel to such jobs as repairing machinery, cleaning the factory and painting during slow periods, can no longer do so.

Sanwa economists stress in their report that if only a tenth of the Japanese manufacturing industry's productive capacity eventually is relocated abroad (and this is the current trend), up to 1.2 million additional domestic positions will be lost. The nation's unemployed rolls in September totaled 1.67 million - using the government's standard statistical approach.

An indication of how this is working out comes from the All Japan Federation of Electric Machine Workers' Unions, which estimates that the industry's growing overseas production reduced domestic employment in the field by 95,000 workers in 1984 alone. Since then, of course, the tempo of direct investment abroad by the industry has picked up considerably.

There can be no doubt that if matters are left as they are, the unemployment situation in Japan will inevitably deteriorate into a major social and political problem - since it is becoming obvious that, unlike past recessions, corporations now have little hope of transferring surplus workers to maintenance jobs or to other parts of their organizations such as their smaller affiliates.

Assuming no drastic changes in Nakasone administration policies are likely to be forthcoming, beyond doubt Japanese manufacturers will continue to reduce their payrolls by the thousands in order to survive as output steadily shifts outside the country's borders. Yet if the government of Prime Minister Nakasone fails to take the lead in moving on the issue it could prove explosive at some point not far down the road.

Mr. Nakasone has started with relatively mild jawboning, but sooner or later (and not much later) he must commit his administration to some sort of intervention, calling corporate and labor leaders together to work out voluntary guidelines that can be supported by new (and costly) bureaucratic programs designed to reduce unemployment by substantial numbers.

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