Published monthly by the Ministry of Health, Labour and Welfare. Updated to the month of December 2016 (published on January 31st, 2016).
Recent data trend:
The demand/supply balance in the Japanese labour market continues to remain tight. The unemployment rate remains unchanged at 3.1% between November and December 2016. Joblessness has averaged 3.1 during the year, lowest in the last 22 years. Japan is at its full employment level.
Other labour market indicators such as new job offers to applicant ratio show that the demand supply balance remains strained. Job offers to applicant ratio rose to a high of 1.43 in December. This marks the highest level since July 1991. In addition, New job offers to applicant ratio also rose touching 2.18 in December after remaining constant at 2.11 for the past two months.
The tightness in the labour market is caused by the shrinkage in the Japanese working population along with increasing demand for labour in Japan. The working age population in Japan, defined as the population of the age between 15 and 64, has been shrinking rapidly. In 2015, the work age population in Japan fell by as much as 0.8 million people. In 2016, the shrinkage was to the tune of 0.7 million people. Accordingly, job applicants have been declining by 5 to 6% per year in the last few years. The ageing and shrinking Japan population is countering the efforts of BoJ and government to stimulate demand and achieve higher level of growth rates.
Wage growth continues to remain a cause of concern. It is an important stimulus for domestic demand but we find that Japanese companies are still reluctant to raise wages despite the rising corporate profit. This reflects that the companies expect the bullish scene to cease. Another reason for the low sticky wages in Japan is the highly regulated labour market which provides strong employment protection to permanent workers, discouraging the firms to raise wages. So, an overhaul of the labour market is required to make the labour market more flexible.
The strained labour supply and high demand situation is expected to raise wages and trigger a wage price inflation spiral. But, despite a full employment situation Japan continues to face the deflationary situation.
This statistics is one of the best indicators to monitor the demand/supply balance in the Japanese labor market. The data comes from Public Employment Security Office. Job referral has been highly regulated in Japan and the Office still plays a dominant role in job referral. For example, job seekers are required to register at the Office to be eligible for unemployment benefits. Aside from the main indicator, job offers to applicant ratio, the growth rate of new job offers is also considered as an important leading indicator for the labor market in Japan. Historically, we can observe an upward wage pressure to arise when the job offers to applicant ratio exceeds one. The job offers to applicant ratio has been consistently below 1 since 1993 except for a brief period between 2006-2007.
Full-time vs Part-time workers
Levels of new job offers and new job applicants
YoY% change in job offers
Source: MHLW, JMA.
The Next Release Date: March 3rd, 2017.